Form 1098-E - Mar 2024

First-time guide to Form 1098-E

If this is your first time dealing with Form 1098-E, you are not alone. This form is the Student Loan Interest Statement, and your loan servicer sends it to report how much interest you paid on qualified student loans during the tax year. Understanding what it contains and how to use it can help you claim a valuable tax deduction.

Reviewing your student loan statements

Before tax season, take time to review your student loan account activity. Your loan servicer is required to issue Form 1098-E if you paid $600 or more in student loan interest during the year. The form will come from your federal servicer (such as MOHELA or Aidvantage) or your private lender.

The key figure on the form is in Box 1, which shows your total interest paid. Compare this number against your monthly loan statements to make sure it looks accurate. If you have loans with multiple servicers, you may receive more than one 1098-E, and you can combine the totals when you file.

When and where to find your 1098-E

Servicers must provide Form 1098-E by January 31 each year. Most servicers also post the form to your online account, so check your loan portal if a paper copy has not arrived. If you paid less than $600 in interest, your servicer is not required to send the form, but you can still find the total by logging into your account.

Here is where to look depending on your servicer type:

• Federal loan borrowers: Log into your servicer's website (MOHELA, Aidvantage, Nelnet) and check the tax documents or statements section.
• Private loan borrowers: Check your lender's online portal under documents or year-end statements.
• Multiple servicers: Gather a 1098-E from each one, since every servicer reports separately.

Understanding the interest amount on your 1098-E

The interest figure in Box 1 is what you use to claim the student loan interest deduction. This is an above-the-line deduction, meaning you can take it even if you do not itemize. It directly reduces your adjusted gross income (AGI), which can lower the taxes you owe or increase your refund.

The maximum deduction is $2,500 per return, but the amount you can claim depends on your income and filing status. The deduction starts to phase out at these modified adjusted gross income (MAGI) levels:

• Single filers: Phases out between $80,000 and $95,000 MAGI
• Married filing jointly: Phases out between $165,000 and $195,000 MAGI
• Married filing separately: Not eligible for the deduction

If you are unsure whether you qualify, check your MAGI from the prior year's return as a starting reference.

Who claims the deduction: parent or student?

Only the person who is legally obligated to repay the loan and who actually made the payments can claim the deduction. For most borrowers, this is the student whose name is on the loan.

If a parent took out a Parent PLUS loan in their own name, the parent claims the deduction. However, if a parent voluntarily makes payments on the student's loan without being the borrower, neither party can claim those payments. Make sure you know who the legal borrower is before entering the deduction on a return.

Where to report Form 1098-E on your tax return

You report the student loan interest deduction on Schedule 1 (Form 1040), Line 21. The amount then carries over to Form 1040, Line 10, reducing your AGI before your tax is calculated.

If you use tax software, look for the student loan interest section under deductions. The software will ask you to enter the amount from Box 1 and will handle any income-based phase-out calculations automatically.

Organizing your tax documents and keeping copies

Good recordkeeping makes filing your taxes easier and can help protect you if the IRS ever has questions about your return. Keep your 1098-E alongside your other tax documents, payment records and supporting financial information for at least three years after you file. Staying organized can also make it easier to track student loan interest deductions, review past filings and prepare future tax returns accurately.

A few steps to stay organized during tax season:

• Download a digital copy from your servicer's website as a backup in case the paper form is lost.
• Store all 1098-Es together if you have multiple servicers, so you do not miss one when filing.
• Save your monthly loan statements as supporting evidence for the interest total on your 1098-E.
• Keep a copy of your filed return showing the deduction you claimed, in case you need to reference it later.

Get your 1098-E form ready in minutes

You can use our 1098-E form template to organize your student loan interest information with ease. While the official form comes from the Internal Revenue Service, you can use Lumin to enter, review and manage your tax details quickly and accurately.