paying student loans i co-signed?

Forum|Forum|6 years ago
March 14, 2020
3 replies
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If I pay off a student loan that I co-signed on is it considered a gift?

Student Loans

xmasbaby0

Employee

If you co-signed the loan you can deduct the interest you paid. There is no deduction for paying the principal,

STUDENT LOAN INTEREST

Only the person whose name is on the student loan and who is legally obligated to pay the loan can deduct the student loan interest. If you did not sign or co-sign for the loan you cannot deduct the interest.

You cannot deduct student loan interest if you are being claimed as someone else’s dependent, or if you are filing as married filing separately.

The student loan interest deduction can reduce your taxable income by up to $2500

There is a phaseout for the Student loan interest deduction, which means the amount you can deduct gets reduced when your modified adjusted gross income hits certain income levels and is even eliminated at certain income levels -

• If your filing status is single, head of household, or qualifying widow(er), then the phaseout begins at $65,000 until $80,000, after which the deduction is eliminated entirely.

• If your filing status is married filing joint, then the phaseout beings at $130,000 until $160,000, after which the deduction is eliminated entirely.

Enter the interest you paid for your student loan by going to Federal>Deductions and Credits>Education>Student Loan Interest Paid in 2019 (Form 1098E)

Look on your 2019 Schedule 1 line 20 to see your student loan interest deduction

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

Carl11_2

Employee

If I pay off a student loan that I co-signed on is it considered a gift?

No. You have a legal obligation to pay it. So if you actually pay it, you can deduct the loan interest (or your portion thereof) reported on the 1098-E.

Hal_Al

Employee

Yes, but only if you want it to be.

You have a choice. I assume both you and your student are legally obligated for the loan. As such you can deduct the interest you paid. Or, you can consider it a gift to the former student, and he/she can deduct it instead.

This assumes the student was your dependent at the time the loans were used to pay for college. He does not have to be your dependent currently.