is loan payment tax deductable?

[allinocarts]

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Hello,

I'm choosing between two med schools whose debt differ in 100K+.


I heard loan payment is tax deductable, but I also heard that it depends on the money you make. For example, if one makes over 100K/year, then they only count $2000 for tax deductable, something like that.

Is anyone in the know? Thanks!!!

 

[yadayadadude]

You can deduct up to $2500 in student loan interest as an above the line deduction -- meaning you don't need to itemize to benefit from the deduction -- if your income is less than the limit, which I believe is roughly $65K for a single person and $135K for married filing jointly. I think the amount you're allowed to deduct phases out at incomes above those limits. In other words, it's a pretty useless tax advantage for most doctors. If you're making SL payments as a resident, you can deduct a portion of the interest you pay ... at a time when your overall tax burden is already low. You'll save something like $600. Once you're an attending, you almost certainly won't qualify. Not to mention the fact that annual SL interest on, say, a $200K debt is most like $15K, so $2500 is a small fraction of the total interest paid. I wouldn't base any financial decisions on this deduction.

As a side note, I'm amazed how frequently this question comes up. Google, people. Google.