tax breaks for payers of student loans and interest?
also cashed in a series ee savings bond this year bought by my grandmother but payable to me.can i get a tax break on the interest earned[3000 dollars] if i’m paying off a student loan?USA
The interest you pay on your student loan is a deduction for you, up to $2500. It is an adjustment to income, and entered on line 33, form 1040, or line18, form 1040A
Paying the student loan with savings bond interest does not exclude the interest from being taxed. Under the Education Savings Bond Program, the interest must be used to pay tuition and fees at a qualified Higher Education Institution, not paying a loan that was used to pay the school. There are other requirements that also must be met before the savings bond interest becomes non-taxable income.
See IRS Publication 17, page 58, for more details on the Education Savings Bond Program:
http://www.irs.gov/pub/irs-pdf/p17.pdf
