J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

33.13 Student Loan Interest Deduction

If you paid interest on a qualified student loan in 2012, you may be able to claim an above-the-line (directly from gross income) deduction of up to $2,500. Eligibility for the deduction is phased out if you have 2012 modified adjusted gross income (MAGI, see below) between $60,000 and $75,000, or between $125,000 and $155,000 if married filing a joint return. On a joint return, the deduction limit remains $2,500 even if you and your spouse each pay interest on a qualified student loan. If you are claimed as a dependent by another taxpayer, or you are married filing separately, you may not claim the deduction regardless of your income.

You should receive a Form 1098-E (or substitute staement) from each lender that received interest payments of $600 or more from you during the year. A worksheet in the form instructions may be used to figure your student loan interest deduction. The deduction is claimed on Line 33 of Form 1040 or Line 18 of Form 1040A.

Caution: Unless Congress extends the 2012 rules, less favorable student loan interest deduction rules will apply in 2013. The deduction will be allowed only for interest payments within the first 60 months for which interest was required. In addition, the phaseout will apply to lower incomes, and voluntary payments of interest during a period of loan forbearance will not be deductible. See the e-Supplement at jklasser.com for an update.

Qualified loans and expenses.

A qualified student loan is ...