Student Loan Interest Paid by Third Party

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Under Treas. Reg. ยง 1.221-1(b)(4)(i), a taxpayer legally obligated to make interest payments on a student loan may be able to deduct interest payments on that loan made by someone else (a third party). The taxpayer is treated as receiving the payments from the other person and, in turn, paying the interest. Of course, to claim the benefit, all other requirements for deducting student loan interest must be met.

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