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Sunday, March 26, 2023

The Daily Money: Have student loans? What to know for tax season

Many student loan payments have been paused under a moratorium extended by President Biden. What does that mean for your taxes?
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The Daily Money

ALL THE MONEY NEWS YOU NEED TO KNOW

Sun Mar 26 2023

 

Brett Molina  Consumer Tech Reporter

@brettmolina23

As of Sunday, Americans are just over three weeks away from hitting the dreaded tax deadline.

If you already filed and got your refund, congratulations. But for those taxpayers who have to pay Uncle Sam, better get moving.

If you've been paying off student loans for a while, you likely know the drill. You might receive a document detailing how much interest you paid the previous year, which you'll then include on your tax return.

This tax season, much like the last couple years, will be different. President Joe Biden extended a moratorium on student loan payments launched at the start of the COVID pandemic in March 2020.

The pause on student loan payments could extend to August 2023, depending on the Supreme Court, which will decide the fate of Biden's student loan debt forgiveness program. Any loan payments would resume 60 days after the litigation ends or the forgiveness program starts.

What does this mean for my taxes?

Because payments are paused, there's no interest to collect, said Jo Willetts, director of tax resources at Jackson Hewitt. "There's really nothing to deduct right now," she said.

If your student loans qualified under the moratorium, then you have no interest to deduct on your tax return. However, if you have a loan from a qualified banking organization not included in the pause, you could still deduct that interest. Double check with your lender to confirm.

Once the pause lifts, many Americans will return to paying off those loans. If you're among them, here are steps you can take to prepare.

About The Daily Money

Each weekday, The Daily Money delivers the best consumer news from USA TODAY. We break down financial news and provide the TLDR version: how decisions by the Federal Reserve, government and companies impact you.

Follow Brett Molina on Twitter: @brettmolina23.

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