tax question
By mollyrose
@mollyrose (414)
United States
March 5, 2008 7:35pm CST
hopefully someone can help me out. i received a 1098-e student loan interest statement telling how much interest was held in default status and says that I may either be able to deduct interest being paid on qualified education loans and is being furnished to the irs. if you are required to file a negligence penalty may be imposed if the irs determines that an underpayment of tax results because you overstated a deduction for student loan interest. ok what does this mean and should i be worried?
1 response
@sedel1027 (17846)
• Cupertino, California
6 Mar 08
When you file your taxes there is a section that asks about interest you paid on student loans. This information is provided on the 1098-e.
Let's say that you did not get the form in the mail until after you filed, you declared $200 in interest. After you file, you get the 1098-e, which states that you only paid $120 that you can deduct. Since you claimed $200, and probably received a credit which made the tax you paid lower, you underpaid in taxes. If you had claimed the correct amount - $120 - the IRS would have $80 more to tax of your income.
So, if you didn't declare your 1098-e, no big deal; if you declared the correct amount, no big deal; this is only a problem when you declare an amount higher than what was reported to the IRS.
Was that helpful?
@mollyrose (414)
• United States
6 Mar 08
I think so. I mean it says the interest amount is $472 so would I put the amount it says on the paper? Also do I send that paper in with my tax returns?
@sedel1027 (17846)
• Cupertino, California
6 Mar 08
Yes, when you go through your return you enter the amount. I believe tax software tells you what block to enter. No, you do not send the 1098 in, that is for your records.
