1099 Tax Software Blog

Form 1098-E is an information return that is used by student loan lenders to report interest paid toward the loan. Any interest paid on a student loan is tax deductible. A copy of Form 1098-E can be requested from a student loan lender for this information to help a person fill out their taxes. For lenders, Form 1098-E must be ordered from the IRS since it can not be downloaded from their website.

Most tax preparation software has a line to enter student loan interest paid to help on calculate their deductions. Student loan interested may be deducted up to $2,500. There are also other requirements for the deduction:

1.) The tax preparer must not have a modified adjusted gross income (MAGI) of over $75,000 if single and $150,000 or more if married.

2.) The tax filer must have any filing status except: married filing separately.

3.) There must have been interested paid on a qualified student loan.

4.) There must be a legal obligation to pay interest on that loan.

Not every loan qualifies. For example, if a student loan was refinanced for more than the amount of the original loan, and the money was used for other purposes besides education purposes, the interest paid on that loan would not qualify for a deduction.

Loan origination fees that are used to pay for services by the lender can not be deducted as interest.

Also, certain student loan repayment programs such as the NHSC Loan Repayment Program may affect how loan interest payments are calculated.

Loan origination fees qualify if the fee is required for the use of the money rather than for services provided by the lender.

Another loan payment that may qualify is credit card debt. Interest on revolving debt that is used to pay for educational expenses can be deducted and is considered student loan interest. However, the credit card must be exclusively used for educational purposes.

Both consolidated and collapsed loans qualify as well. Refinanced student loans qualify as well, again, as long as the money is used for educational purposes.

Voluntary payments also qualify for the deduction. Interest payments can be deducted for the life of the loan.

You may have received Form 1099-G from your state or the federal government. Form 1099-G is an information return used by the government to report any income from federal or government sources. The IRS requires that government agencies report payments made during the tax year because those payments may be considered taxable income.

Income that listed on Form 1099-G may be required to be reported on Form 1040 or other tax returns. Some of the types of payments that may be included on Form 1099-G include state and local tax refunds, grant income, subsidies, unemployment benefits, disability insurance benefits and more. Form 1099-G should be received by the taxpayer by January 31st. If a 1099-G form has not been received by the end of January, the state, federal, or local agency that made payments to the taxpayer should be notified.

It should be noted that although Form 1099-G reports the total amount of unemployment benefits received during the year, the American Recovery and Reinvestment Act allows for the first $2,400 of unemployment benefits to not be taxed by the government. However, this ruling only applies for the 2009 tax year and onward.

Another issue to note is that although disability insurance benefits are not considered taxable, that disability benefits that are considered a substitute for unemployment insurance are considered taxable. For example, if an employee must leave work due to a disability, their disability benefits are not considered to be taxable. However, if a person is already receiving unemployment insurance and then becomes disabled and begins receiving disability benefits, then those benefits are considered a substitute for unemployment insurance and are taxable.

Form 1099-G is one of types of several information returns that are used to report taxable and non-taxable payments.