Tis’ the (tax) season. Like most holidays, tax season can be stressful. You replace distant relatives with paperwork, Santa Claus with an accountant, and (for some) presents with your tax refund at the end of the process.
For student loan borrowers, a little extra work could go a long way.
To make sure you get your taxes right, cover these bases when filing right to avoid an audit or missed credits.
GET THE RIGHT FORMS: WHAT’S A 1098?
Remember that Form 1098-E is your official Student Loan Interest Statement for tax filing. This shows the amount of interest you paid on your eligible student loans during the previous tax year.
If you made more than $600 worth of payments in the last tax year, you should receive this form from your loan servicer. Your interest deduction can be worth up to $2,500. You may be able to reduce your payment with income-based repayment plans. If you haven’t received the form you can call your student loan provider or find it online.
AVOID THE REFUND OFFSET (NOT GETTING YOUR ENTIRE REFUND)
If your loans are in default, meaning they’ve gone unpaid for more than nine months, the Department of Education could refer your account to the Department of Treasury. If that happens, they’ll likely withhold your tax refund to satisfy your debt – meaning you lose some or all of your refund.
Loan rehabilitation, for federal student loans, protects you for the withholding and puts you an affordable payment plan for the road ahead–avoiding the tax offset. To request rehabilitation, contact your student loan servicer.
DON’T GET TRIPPED UP BY STUDENT LOAN FORGIVENESS
In some cases, if you work in a public service job or as a teacher, you may qualify for student loan forgiveness. Student loan forgiveness is taxable and for some could result in a surprise bill. Check the mail or your servicer’s online portal (where you manage payments) for 1099-C form from which states the amount of debt forgiven.
If you need help finding your servicer, check out this post on tips for contacting your servicer.
BONUS: ASK FOR A STUDENT LOAN HELP FROM YOUR EMPLOYER
Be a smart borrower. While you’re focused on last year’s finances and go a step further to get student loan help in the year to come.
Requesting student loan benefit help from your company is easy. Complete the form below to request the benefit that can help untangle the complexities around student loans and cut your repayment time.