Another issue we often times experienced around tax time is who can claim what in terms of their taxes. This often happened because a child was making payments on his or her Parent PLUS loan and because they made that payment they want to be able to claim that eligible interest on their taxes.
Here is a quick rundown of who can claim eligible student loan interest for tax purposes:
-Only the borrower can claim the interest. So if someone makes a payment on someone else’s loans, they are not able to claim that interest. This is parents for students, student for Parent PLUS loans, there are no exceptions.
-The payment cannot be a third party payment. So if loans are paid through consolidation or something such as an Americorp payment is made, it would not qualify.
-As a result, technically payments made by a parent for a child cannot be claimed by anyone as it’s not made by the borrower and you can’t claim a third party payment. However unlike a 3rd party such as Americorp that would report the payments and they are coded differently in the system, things like a parent paying for a child would come up as a borrower payment and could typically be claimed by the borrower, even if officially this may not be correct.
Remember your servicer will only send you tax information if it is $600.00 or more in qualifying interest but you can use any qualifying interest on your taxes.
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