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I currently have a student loan in my name I am paying back and my parents have a student loan in their name for me that they are paying back but I am paying them every month for it. I read this article a while ago and have a question regarding when I’m doing my taxes this year.

http://finance.yahoo.com/news/the-most-overlooked-tax-deductions.html

Generally, you can only deduct mortgage or student-loan interest if you are legally required to repay the debt. But if parents pay back a child’s student loans, the IRS treats the money as if it was given to the child, who then paid the debt. So, a child who’s not claimed as a dependent can qualify to deduct up to $ 2,500 of student-loan interest paid by Mom and Dad. And he or she doesn’t have to itemize to use this money-saver. Mom and Dad can’t claim the interest deduction even though they actually foot the bill since they are not liable for the debt.

Does this mean when I do my taxes this year (I have been doing the free hrblock online one), when it says student loan interest paid, I can put the interest amount I have paid for my loan PLUS the loan interest amount my parents have paid on loan in their name?

Also, if that is the case, I have missed this the past 4 years I have been doing my taxes so can I get money from all those previous years I missed adding in the loan interest amount my parents have been paying? Would I need to go to a professional or can I still do it online via HRBlock or Turbotax?

Thanks.

3 Thoughts on Can I claim interest deduction on my taxes from the student loan my parents are paying interest on?
  1. Reply
    rtfm
    July 17, 2012 at 7:14 pm

    No. The loan your parents have is THEIR loan, not yours. It is in THEIR name.

    The article you’re talking about means that suppose your parents decided to be nice and gave you the money to make payments on YOUR loan, the one that’s in YOUR name — you would be allowed to deduct that interest even though you weren’t actually the one making the payments.

  2. Reply
    SmartA$$
    July 17, 2012 at 7:34 pm

    No, you can’t do this. You have it backwards.

    The provision you read would allow you to deduct the interest if the loan was in your name but your parents were paying. Your situation is opposite: the loan is in their name and you are paying. The provision doesn’t work in reverse.

    In this case, your parents can claim that student loan interest on their tax return because they are legally liable for the debt and they are paying it. The fact that you give them money each month in the exact amount of the payment is going to be called a gift.

  3. Reply
    Common Sense
    July 17, 2012 at 8:25 pm

    Since when can you deduct interest on a loan you don’t pay? Nice try, Skippy.

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