got no idea, moonbird! just stopped thru to say hey man.

No, it will not right now, as long as the money was all used for school.
However, you may not want to telefile this year, as you would certanly qualify for education credits on the federal (hope, lifetime learning, or as a page one 1040 deduction) and, depending on where you are, perhaps the state as well. (NY has a _refundable_ undergrad tuition credit, for example).
Even if it is in the form of loans, you take the education credits as you go to school, since you are ultimately responsable for the cost of education. (you don't get credits if grants and whatnot paid for everything).

However, when you start paying them off, you can deduct the interest paid on the front of your 1040 (no need to itemize).

It isn't that hard. If you're smart enough to get into college you're smart enough to figure it out. ;) (that's what I tell the college kids who come in to my office and want to pay me a small fortune to do their taxes, since I would feel guilty and mean taking their money.)

The student loan thing is pretty simple. I paper-file with a 1040 A or EZ or whatever you file when you have no dependents. You'll get a statement of any loan interest for the year (1099), and you deduct it on the line that asks for it.

The first part should read:
No, it will not cause you to pay more right now, as long as the money was all used for school.

A loan isn't considered income. If you choose to pay the interest as it accrues, you can take that deduction. If you're having it deferred, you won't have to deal with it.

Don't forget to take that tuition deduction, though.

And what they said.

postmodernmillie: technically, it can be if you get loans for more than the cost of books, fees, and tuition.
I have never, ever seen that enforced, though. But, you never know...

It would also be treated as income if there is a dispute over who can claim someone as a dependant. As in, if a kid has a fortune out in loans, in their name, for school, that is counted as support they provide themselves. If they then file claiming themselves, the parents would be forced to prove to the IRS that they provided more than the loan amount in support to claim the kid as a dependant.
Now that, I see all the time.

I have no idea, but I hope you are planning to show up at Drinking Liberally tonight! I owe you a beer at least after my miserable performance in trivia last night. *hugs moonbird*

aww, thanks mgl. and thanks to all of you who helped with this. i certainly loathe paying taxes like everyone else, and this new arrangement had me a bit tweaked out. now, i can relax... ahhhh....

oh, how does the who tuition deduction thing work?

moonbird... here is the IRS page on it.

Basically, it means, as an undergrad, you can take the hope credit a total of two years (or less).
You can take the lifetime learning credit at any time, graduate or undergraduate. You'll get a form from the school called a 1098-T that tells you how much tuition was.

You calculate it on form 8836.

You enter the amount from that form on line 60 of the 1040A.

Also, if you want, feel free to drop me an email. I'm not an accountant or tax attourney, but I do work for one of the major tax prep companies (the one that actually trains their people, not the spin-offs).

wow, that's awesome. I'll email ya in the AM.