I was at a seminar and there was a discussion about student loan interest deduction if the loan was in the child's name only and the parents paid the loan. I have always been understood that if the student was a dependent no one could claim the interest but if the student was filing their own return the student could claim the interest. Some attendees stated that in Quickfinder there is a court case regarding this and the interest deduction could be claimed by the parents. Anyone have any information on this?
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A parent paying interest
A parent paying interest for a child's loan when not being claimed as a dependent, such as after graduation, can be deducted by the child. If a parent is liable for the loan, then it can be deducted by the parent if the child was a dependent at time of the loan. See Pub. 970. -
This was always my understanding. Some people at the seminar indicated that there were court cases that allowed the parents to take the deduction if they were not liable for for the loan and the student was being claimed as a dependent. My question is has anyone heard of any court cases involving this?Comment
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Yes, they just said it was noted in the Quickfinder which I don't have, I use the Tax Book.Comment
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Don't see anything in Quicfinder
Don't see anything in the 2013 Quickfinder relating to a court case.Comment
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A bigger issue may be whether the parents would even be able to claim their child as a dependent is the child is borrowing substantial sums in his or her name.Comment
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QF agrees with you
I see nothing in QF about court cases on this matter. QF explains the law exactly how you understand it to be.Comment
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