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What is Form 1098-E and Who Should Receive One?

Form 1098-E serves as the Student Loan Interest Statement and is used for claiming the  Student Loan Interest Deduction. If you have been repaying student loan debt to institutions such as Sallie Mae or American Education Services, you are entitled to claim the interest paid as a deduction on Form 1040 or 1040A.

You will receive a 1098-E if the interest you paid on a student loan in a given year exceeded $600. Form 1098-E is available directly through the web portal of your loan servicer or you can request a paper copy. If you have been repaying your loans strictly online, then your Form 1098-E will not be mailed to you and instead is available on the loan servicer’s website.

Please note, if the student has been listed as a dependent by another taxpayer the student becomes ineligible for this deduction. Similarly, the taxpayer who claimed the student as a dependent is also unable to claim the Student Loan Interest Deduction.

What information is reported on a 1098-E?

Your loan servicer’s information and federal identification number should be clearly outlined in the Recipient’s/Lender’s box. This information is completed by the issuer of the 1098-E and you can use this as a checklist to confirm that you have received all of your 1098-E forms if you have multiple loan servicers.

Underneath the loan servicer’s information is your personal information including name, address, social security number, and account number used for your student loan. Review this information and If anything is incorrect on your 1098-E, contact your loan servicer directly to settle the discrepancy. The IRS is not able to assist with these matters.

Box 1 of the form reflects the total amount of interest you can claim for the tax period. Sometimes this number may not be the exact amount of interest you paid if the covered period has come to a close, i.e. the first 60 months that your loan is in repayment not including deferment, forbearance and other graces.

In general, Box 2 does not concern most student debtors. Box 2 is checked if there are no interest payments included loan origination fees or capitalized interest before Sept 1, 2004. If the box is checked and you believe you are entitled to a deduction, consult Pub. 970 for more information about deductible loan origination fees or capitalized interest.

How do I claim the Student Loan Interest Deduction?

Reflect the exact amount reported on Form 1098-E in Box 1 to ensure no conflicts between your taxes and what’s been reported to the IRS already. Fill in line 33 of Form 1040 or line 18 of Form 1040A. There is no line on Form 1040-EZ to claim the Student Loan Interest Deduction.

If you believe you have paid more interest than shown in Box 1, contact your loan servicer. Do not put an amount that does not match the reports given to the IRS. Please note the warning that is printed directly on your 1098-E that says overstating your deduction could result in action by the IRS.

Do I submit my 1098-E with my 1040 return?

Financial institutions, government agencies and educational institutions provide you with a 1098-E to keep for your records. The loan servicer sends the IRS the information directly and you must not affix it to your return. Report the exact amount of the summation of all your 1098-E forms on the appropriate lines and hold on to the forms for your records.

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Erich J. Ruth

Erich J. Ruth provides technical support for National Software which is the parent company for 1099FIRE. 1099FIRE develops and markets a comprehensive range of products that enables any size of business or institution to effectively manage and comply with year-end filing requirements. 1099FIRE is an employee-owned company located in Phoenix, Arizona.

If you have any questions or comments about our software, feel free to contact us at any time.

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