Repaying student loans might already be bogging you down. You may not be financially ready to buy a home or get married until you’ve paid off your student loans. But your student loans impact more than your future purchases — they also affect your taxes.

Before you submit your taxes, make sure you know how your student loans can help — or hurt — your filing.

Student loan interest deduction

When you make monthly payments to your student loans, it includes your principal payment as well as your interest payment. Whether you have private or federal student loans, the student loan interest deduction lets you reduce your taxable income up to $2,500 a year. Although you might only qualify for up to the amount you paid in interest, which might be less than $2,500.

You’re eligible for the deduction if you paid student loan interest last year and you aren’t filing as “married filing separately.” If you and your spouse are filing jointly, neither of you can be claimed as a dependent on someone else’s return.

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