What is Form 1098-E?
Your student loan servicer sends a 1098-E when you paid $600 or more in interest on a qualified education loan during the year. The interest is deductible as an above-the-line adjustment on Schedule 1, reducing your AGI.
SupportedKey Boxes
| Box | Description | Where it flows |
|---|---|---|
| Box 1 | Student loan interest received | Schedule 1 Line 21 (up to $2,500 cap) |
How PaisaTax Handles It
- Upload or manual add — one slot per loan servicer
- Aggregation: All Box 1 values sum across all 1098-E slots
- $2,500 cap: The deduction is limited to $2,500 per year
- MAGI phaseout: The deduction phases out at $80,000–$95,000 (Single) and $165,000–$195,000 (MFJ). The engine computes the phaseout automatically.
Common Situations
- Multiple loans: Add one slot per servicer. PaisaTax sums all interest and applies the $2,500 cap once.
- MAGI phaseout: High earners may lose part or all of the deduction. The engine reduces the deduction proportionally.
- MFS disqualification: The student loan interest deduction is not available for Married Filing Separately.
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Warning
This is an above-the-line deduction — it reduces AGI even if you take the standard deduction. It's more valuable than an itemized deduction because it lowers your AGI, which can increase eligibility for other tax benefits.