You are correct that you can deduct up to $2,500 in student loan interest each year. However, my understanding of the rules is that you can only claim the deduction for interest that you paid during the year, and interest that is accruing on your loans doesn't count.



You should have received a Form 1098-E during January which reflected the total student loan interest you paid during 2002.

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Replying to:

I am a resident physician with a significant debt that is accruing interest while it is in forbearance. Unfortunately, I have only paid a small amount of interest in the last fiscal year. Can I deduct accrued interest on which I HAVE NOT paid? I was under the impression that I could not, but I had a fellow resident tell me that I could deduct up to $2500. If this is true, how could I ammend my taxes for this year.(I just sent my taxes in.)



Thanks in Advance,

Scott

Zip Code: cpa@mdtaxes.com