Q. My daughter is paying off her college student loans. (She graduated in 2008.) Can she deduct all the payments if she itemizes? D.J., Denville, N.J.
A. Not exactly. For starters, your daughter may claim a deduction for interest on student loans whether or not she is an itemizer. The deduction is claimed “above the line,” but is limited to $2,500 a year. It begins to phase out for single filers with an AGI of $60,000 ($120,000 for joint filers).
Tip: A few years ago, you could only deduct 60 months’ worth of student loan interests. The 2010 Tax Relief Act extended the temporary repeal of the 60-month rule through 2012.