Question

Which of the following statements accurately describes the availability of the deduction for interest paid on a qualified education loan in 2018?

The deduction can be claimed by a taxpayer who is claimed as a dependent on another taxpayer's return.

The deduction is available for interest paid on a loan only during the first 60 months of interest due under the loan.

The deduction is not available to married filing separate returns.

The maximum deduction is $5000.

Answer 1

One of the deductions under federal income tax is deduction of interest paid on loan taken solely for the purpose of paying for student’s higher studies. The maximum limit under this head is $2,500. But for this deduction there are certain eligibility criteria which need to be understood. Some of the important points are as follows: -

This deduction can be availed by taxpayer, his/her spouse, or the dependent.

The period must be identical to the academic year in which student is studying

Parents become ineligible for this deduction if they file separate returns while they are married. Single parents are eligible for this deduction if they file separate returns along with a condition that they need to fulfill other criteria.

One does not necessary required to itemize this deduction.

Therefore, option C is correct.