Sage-Tips

Is there any tax benefit on education loan?

You can claim deduction of Interest paid on loan taken for pursuing higher education from taxable income under section 80E of the IT Act. According to Section 80E the deduction is allowed on the total interest amount of the EMI paid during the financial year.

Which loans are eligible for tax deductible?

Let’s throw light on three important loans that qualify for a tax rebate as per the provisions of the Income Tax Act, 1961.

• Education Loan Repayment: Deductions Under Section 80E.
• Home Loans: Deductions/Subsidy Under Section 80C, Section 24, 80EE, 80EEA, CLSS.
• Personal Loans: Indirect Deductions as per Use of the Loan.

Which tax regime is beneficial for salaried employees?

Since salaried have to forgo various benefits like standard deduction, HRA, LTA and there would be many mandatory items like employee provident fund contribution, life insurance premium, school fee, home loan principal repayment, it will make sense for most of the salaried to stay with old regime.

Which deduction is applicable for interest on education loan?

section 80E
Section 80C of the Income Tax Act provides deduction in respect of the tuition fees paid for the education. However, section 80E of the Income Tax Act provides deduction in respect of interest paid on educational loan taken for higher education.

What is Section 80CCD?

What is section 80CCD(1B)? Section 80CCD(1B) specifically deals with contributions made by an individual (employee or self employed) to pension schemes as notified by the central government. This section provides additional deduction of Rs 50,000 over and above 80C limit of Rs 1.5 lakh.

Can I claim my wife’s student loan interest?

No one else can claim you—or your spouse, if you’re married—as a dependent on their tax return. You are legally obligated to pay the interest on the student loan. Accumulation of interest on your balance by itself is not deductible.

How do I get a tax benefit on a personal loan?

One can avail tax benefits from their personal loan if they have used the personal loan money for the purchase or construction of a residential property. The borrower can avail tax benefits for repayment of interest for the same under Section 24 of the Income Tax Act, 1961.

How can I save tax on my salary above 30 lakhs?

An Individual could claim the following Tax Deductions:

1. Section 80CCD(1B) (Rs 50,000): Investment in the NPS (Shall you Invest Rs 50,000 in NPS to Save Tax u/s 80CCD (1B)?)
2. Section 80C/80CCC/80CCD (Rs 1,50,000): The Investment in the EPF, PPF, The Pension Plans, ELSS, FD, NPS, NSC, SCSS, Life Insurance, SSA and NPS.

Can I claim my child’s student loan interest?

Dependent student loan interest can be claimed on your tax return under certain circumstances. You can claim interest on a qualified student loan you took out for your dependent as long you meet both of these: The loan was in your name. You paid the interest on it.

Can parents claim student loan interest deduction?

One of the most common misconceptions about the student loan interest deduction is that a parent can claim it for helping make payments on their child’s loan. That is not the case. A parent can take the deduction only if they are personally liable for the loan.

Do I need to file a tax return after joining Cognizant?

My friend, Cognizant is not a tax authority, they avoid paying taxes but that does not make them a tax authority. So, you do not need to file a tax return to this. For more information, you can ask your manager, who hired you or the HR who approved your onsite placement (you have to be definitely onsite….) They will help you.

Are you eligible for educational credits or deductions?

You can use the IRS’s Interactive Tax Assistant tool to help determine if you’re eligible for educational credits or deductions, including the American Opportunity Tax Credit (AOTC) or the Lifetime Learning Credit (LLC). There are additional requirements for foreign students and dependents who have an ITIN.

What is the income limit for pass through deduction 2020?

For 2020, the threshold is taxable income up to $326,600 if married filing jointly, or up to $163,300 if single. If your income is within this threshold, your pass-through deduction is equal to 20\% of your qualified business income (QBI). This is the maximum possible pass-through deduction.

How can tax credits help you pay for higher education?

Tax credits, deductions and savings plans can help taxpayers with their expenses for higher education. A tax credit reduces the amount of income tax you may have to pay. A deduction reduces the amount of your income that is subject to tax, thus generally reducing the amount of tax you may have to pay.