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Overview

The add-1098e command adds or updates the student loan interest deduction on your return. This is an “above-the-line” deduction (Schedule 1, Line 21) that reduces your Adjusted Gross Income (AGI), providing tax savings even if you take the standard deduction.

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Syntax

/ezfile:add-1098e <amount|path-to-1098e>
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amount|path-to-1098e
string
required
Either a dollar amount (e.g., 1800 or $1,800.00) or a path to your 1098-E form (PDF or image).

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What It Does

  1. Determines interest amount - Parses dollar amount or extracts Box 1 from 1098-E document
  2. Checks eligibility - Verifies filing status, qualified loan, and MAGI requirements
  3. Calculates deduction - Applies 2,500maximumandMAGIphaseout(2,500 maximum and MAGI phaseout (85K-$100K)
  4. Shows impact - Displays before/after comparison of AGI, taxable income, tax, and refund
  5. Recalculates return - Automatically recomputes the full return if one exists
  6. Updates files - Saves updated return to ./returns/return-2025.json

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Example Usage

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With a dollar amount:

/ezfile:add-1098e 1800

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With a 1098-E document:

/ezfile:add-1098e ~/Documents/1098e-2025.pdf

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Eligibility Requirements

All of these must be true to claim the deduction:
  • Filing status is Single (always true for EZFile users)
  • The interest was paid on a qualified student loan
  • You are not claimed as a dependent on someone else’s return
  • Your Modified Adjusted Gross Income (MAGI) is below $100,000

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Deduction Calculation

The command applies IRS rules for 2025: 
# Maximum deduction is $2,500
raw_deduction = min(interest_paid, 2500)

# Phaseout based on MAGI
if MAGI <= 85000:
    deduction = raw_deduction  # Full deduction
elif MAGI >= 100000:
    deduction = 0  # No deduction (phased out completely)
else:
    # Partial deduction (linear phaseout)
    reduction_ratio = (MAGI - 85000) / 15000
    deduction = round(raw_deduction * (1 - reduction_ratio), 2)

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Example 1: Below Phaseout

Interest paid: $2,000
MAGI: $70,000

Result: $2,000 deduction (full amount, under $85K threshold)

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Example 2: In Phaseout Range

Interest paid: $3,500
MAGI: $92,500

Calculation:
  Raw deduction: min($3,500, $2,500) = $2,500
  Phaseout: ($92,500 - $85,000) / $15,000 = 50%
  Final deduction: $2,500 × (1 - 0.50) = $1,250

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Example 3: Above Phaseout

Interest paid: $1,800
MAGI: $105,000

Result: $0 deduction (MAGI exceeds $100K limit)

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Output Format

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If return already calculated:

Student Loan Interest Deduction

  Interest paid:              $1,800.00
  Maximum deduction:          $2,500.00
  Your deduction:             $1,800.00

  Impact on your return:
    Previous AGI:             $44,629.35
    New AGI:                  $42,829.35  (-$1,800.00)
    Previous taxable income:  $28,879.35
    New taxable income:       $27,079.35  (-$1,800.00)
    Previous tax:              $3,227.02
    New tax:                   $3,011.02  (-$216.00)
    Previous refund:           $1,178.33
    New refund:                $1,394.33  (+$216.00)
Why this matters: The student loan interest deduction is an “above-the-line” deduction, meaning it reduces your Adjusted Gross Income (AGI) directly. This is valuable because:
  1. It reduces your taxable income even if you take the standard deduction
  2. A lower AGI can help you qualify for other credits (like the Saver’s Credit)
  3. For every dollar of deduction, you save your marginal tax rate in taxes
At your income level, your marginal tax rate is 12%, so this 1,800deductionsavesyouapproximately1,800 deduction saves you approximately 216 in taxes.

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If no return calculated yet:

Student loan interest of $1,800.00 recorded.
This will be applied when you run /ezfile:calculate or when
your return is calculated via /ezfile:file-taxes.

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Where It Goes on the Return

The deduction flows through these form lines:
1

Schedule 1, Part II, Line 21

Student loan interest deduction: $1,800.00
2

Schedule 1, Line 26

Total adjustments to income: $1,800.00
3

Form 1040, Line 10

Adjustments to income (from Schedule 1): $1,800.00
4

Form 1040, Line 11

AGI = Line 9 - Line 10

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Common Questions

The maximum deduction is 2,500,regardlessofhowmuchyoupaid.Ifyour1098−Eshows2,500, regardless of how much you paid. If your 1098-E shows 3,000, you can only deduct $2,500.
A qualified student loan is a loan taken out solely to pay qualified education expenses (tuition, fees, room, board, books, supplies, equipment) for you, your spouse, or your dependent. The loan must have been for education provided during an academic period for an eligible student.
If your MAGI is between 85,000and85,000 and 100,000, your deduction is reduced proportionally. The command automatically calculates the reduced amount and shows you the phaseout applied.
No. The IRS considers loan payments made by someone else as a gift to you, and then treated as if you paid it. However, you can only deduct interest you are legally obligated to pay. If your parents made payments on a loan in your name, you can claim the deduction.
  • file-taxes - Main command to calculate your return
  • calculate - Recalculate return after adding deduction
  • review - View updated return summary
  • explain - Understand AGI and above-the-line deductions

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