Hi. Son started Grad school in August. He received 100% Federal loans to cover All of his schooling and living expenses. He was NOT employed for all of 2014. Full-time student. Question: Does he need to file taxes? All of his loans began accruing interest from start of loan, however we have not made any payments towards these loans and will not make any payments until after he graduates in 3 years, so I believe that we cannot claim anything for interest until once he starts making payments after graduation. Is this correct?? Thank you in advance.
You cannot claim interest deduction on your son’s student loans.
4kidsdad, I wasn’t planning to claim him or anything related to him on my taxes. I’m just thinking of him, basically asking the question for him, as to whether or not he needs to file taxes since the only income received was from federal loans. I didn’t know if he needed to count this as income or not??
Money received from a loan is not income and is not taxable, unless the debt is forgiven.
Too much loans for grad school.
^Eh, it depends. A lot of times that’s the only way to finance graduate school, and in some fields you’ll make enough to repay it. Besides, OP never said where her son is going - he could’ve gotten into a public university and is only spending like $30K a year. Or maybe he’s getting an MBA at Wharton and can expect to repay those loans quickly.
Either way, no, he doesn’t need to file taxes if he made no income in 2014. He might want to try, though, to see if there are any refundable credits or something he’s eligible for.
It depends upon how much and for what programs. My son’s DD is borrowing for her master’s but it clearly is worth it, for her profession with the demand and salaries. She’s already worked in the field and needed the master’s to move up. Decided to do it full time.
Many medical,and law school students borrow the full cost of attendance.
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didn't know if he needed to count this as income or not??
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They’re LOANS…not income.
Did you include your mortgage loan as income ? Did you include a car loan as income? no, of course not. those were loans…not income.
Once he starts actually paying on the loans, he will be able to take 2550$/year on interest deduction. This comes directly off his income. HOWEVER, if he has not paid interest off in the 6 month grace period after graduation, that ALL rolls over into the total loan amount. If he (or you) can pay off $2550 in interest before it rolls over into the loan, he can take it the first year.