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Student Loan Interest is Tax Deductible

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Student Loan Interest is Tax Deductible

We’re approaching the only time of year where it actually feels good to have paid gallons of juice on those student loans: TAX TIME.

Student loan interest is TAX DEDUCTIBLE.  

Your loan servicer should provide you with a 1098-E statement, either by mail or online.  This document provides you with all the necessary information for your tax return.  

You can deduct up to $2,500 of the interest you paid on qualifying student loans in 2010.

There are a handful of requirements you need to meet to qualify for the deduction:

1) Income

There is a phase out range for income level (if you earned more than a specific amount of income you don’t qualify for this deduction).  

•    Single people: $60,000-$75,000

•    Married filing joint: $120,000-$150,000

2)    Filing Status

If you’re filing status is “Married Filing Separately,” you don’t qualify.

3) Not a dependent

You don’t qualify if you’re claimed as a dependent on someone else’s tax return (and if you’re married, your spouse can’t be claimed as a dependent either).

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Playing Financial Dress Up Isn’t Worth It

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I just got done reading the book “Waiter Rant,” a book of memoirs written by a man who waited tables for several years at an upscale NY restaurant.  It’s an interesting and entertaining read and I highly recommend it.

After reading this excerpt I couldn’t wait to post it. 

In this portion of the book the author is telling the story of a night when a group of girls came into the restaurant.  They ran up a big bill and one of the girls offered to pay for it all, only to show up a few hours after they all left claiming she had gotten food poisoning from her meal.  She insisted that the restaurant refund her the entire tab. 

Something about this girl’s story seems, well, fishy.  She never looked sick when she was flirting with me.  She also made a big show of picking up the tab and leaving me a nice, fat tip.  My theory is that when she got home the buzz from her pinot grigio wore off and she had an episode of buyer’s remorse. 

Quite a few of the 20 something women (and men) I serve really can’t afford the “Sex in the City” lifestyle they’re living.  They spend all their money on fancy clothes, expensive shoes, and dinners at trendy eateries so they can live some outsized, Candace Bushnell fantasy.  After their fancy cocktail soirees you’ll find half these girls slinking back to a rat-trap apartment, anxiously looking up their available credit on the internet. 

-    Waiter Rant (2008)

In the world of relentless advertising with Cribs and My Super Sweet 16 being shown 24/7, it seems like we’re constantly being bombarded with the notion of how cool it is to be rich and spend money.  Some days I feel like an outsider because I’m not bringing in a seven figure income, even though most of the people around me AREN'T making that kind of money either!

After being told day after day that being rich is cool and if you’re not blowing mad cash you’re a nobody, a lot of young people (and people of all ages, really) start trying to keep up with the Kardashians on a meager budget and find themselves creating major long term financial repercussions, like mounds of consumer debt, an obliterated credit score, and zero savings.

It’s like a little kid playing dress up.  Clopping around in saggy blouses and giant shoes was cute when you were 4.  As an adult, it’s pathetic. 

If you’re striving to live within your means and you’re feeling frustrated, take heart.  You’re in good company!  True, MTV won’t be knocking down your door to make a reality show about you, but that should make you proud – it’s because you’re not a train wreck!  It’s also worthwhile to remember that rich people don’t get rich by spending money they don’t have.

Pretending to be rich to impress other people is the fast track to financial and emotional ruin.  Being smart with your money and working hard to make it grow is smart, impressive, respectable, etc. etc. 

Don’t listen to anyone who tries to tell you otherwise. 

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