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met, Darla can deduct this payment of interest on her tax return. Example 2. Ethan obtained a qualified student loan to attend college. After graduating from college, the first monthly payment on his loan was due in December. As a gift, Ethan's mother made this payment for him. No one is claiming Ethan as a dependent on his or her tax return. Assuming all other qualifications are met, Ethan can de- duct this payment of interest on his tax return. No Double Benefit Allowed You can't deduct as interest on a student loan any amount that is an allowable deduction under any other provision of the tax law (for example, home mortgage interest). You also can't deduct as interest on a student loan any amount paid from a distribution of earnings made from a qualified tuition program (QTP) after 2018 to the extent the earnings are treated as tax free because they were used to pay student loan interest. For more information, see chapter 7. For payments made after March 27, 2020, and before January 1, 2026, do not deduct as interest on a student loan any interest paid by your employer under an educa- tional assistance program. See chapter 10. Figuring the Deduction Your student loan interest deduction is generally the smaller of: • $2,500, or • The interest you paid during the tax year. However, the amount determined above may be phased out (gradually reduced) or eliminated based on your filing status and MAGI as explained below. You can use Work- sheet 4-1 (at the end of this chapter) to figure both your MAGI and your deduction. Form 1098-E. To help you figure your student loan inter- est deduction, you should receive Form 1098-E, Student Loan Interest Statement. Generally, an institution (such as a bank or governmental agency) that received interest payments of $600 or more during 2021 on one or more qualified student loans must send Form 1098-E (or an ac- ceptable substitute) to each borrower by January 31, 2022. For qualified student loans taken out before September 1, 2004, the institution is required to include on Form 1098-E only payments of stated interest. Other interest payments, such as certain loan origination fees and capi- talized interest, may not appear on the form you receive. However, if you pay qualifying interest that isn't included on Form 1098-E, you can also deduct those amounts. See Allocating Payments Between Interest and Principal, ear- lier. The lender may ask for a completed Form W-9S or sim- ilar statement to obtain the borrower's name, address, and taxpayer identification number. The form may also be used by the borrower to certify that the student loan was incurred solely to pay for qualified education expenses. Effect of the Amount of Your Income on the Amount of Your Deduction The amount of your student loan interest deduction is phased out (gradually reduced) if your MAGI is between $70,000 and $85,000 ($140,000 and $170,000 if you file a joint return). You can't claim a student loan interest deduc- tion if your MAGI is $85,000 or more ($170,000 or more if you file a joint return). Modified adjusted gross income (MAGI). For most taxpayers, MAGI is adjusted gross income (AGI) as fig- ured on their federal income tax return before subtracting any deduction for student loan interest. However, as dis- cussed below, there may be other modifications. Table 4-2 shows how the amount of your MAGI can af- fect your student loan interest deduction. Effect of MAGI on Student Loan Interest Deduction IF your filing status is... AND your MAGI is... THEN your student loan interest deduction is... single, head of household, or qualifying widow(er) not more than $70,000 not affected by the phaseout. more than $70,000 but less than $85,000 reduced because of the phaseout. $85,000 or more eliminated by the phaseout. married filing joint return not more than $140,000 not affected by the phaseout. more than $140,000 but less than $170,000 reduced because of the phaseout. $170,000 or more eliminated by the phaseout. MAGI when using Form 1040 or 1040-SR. If you file Form 1040 or 1040-SR, your MAGI is the AGI on line 11 of that form figured without taking into account any amount on Schedule 1 (Form 1040), line 21 (student loan interest deduction), and modified by adding back any: 1. Foreign earned income exclusion, 2. Foreign housing exclusion, 3. Foreign housing deduction, 4. Exclusion of income by bona fide residents of Ameri- can Samoa, and 5. Exclusion of income by bona fide residents of Puerto Rico. MAGI when using Form 1040-NR. If you file Form 1040-NR, your MAGI is the AGI on line 11 of that form fig- ured without taking into account any amount on Schedule 1 (Form 1040), line 21 (student loan interest deduction). Phaseout. If your MAGI is within the range of incomes where the credit must be reduced, you must figure your reduced deduction. To figure the phaseout, multiply your interest deduction (before the phaseout, but not more than Table 4-2. Chapter 4 Student Loan Interest Deduction Page 35