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Tax credits for interest paid on s. loans

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M. Colleen View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote M. Colleen Quote  Post ReplyReply Direct Link To This Post Topic: Tax credits for interest paid on s. loans
    Posted: 16/March/2005 at 11:12am
Ok, I'm fairly stable now & will start repaying the loans. Over the years I have made payments ($1000, $2000) when the loans were not in repayment status yet. Also the AB and fed govts have taken rebates, tax refunds, and GST. How do I get receipts for these government things? Now that the loans are in collection, with exhorbitant interest involved, how does the income tax deduction for student loan interest work? Who issues receipts? When? Is the tax credit just for interest paid, or also for repaying the principal, and when it's gone to collection how do we differentiate? Replies from anyone who has links or information or legislation updates would be greatly appreciated!
m.colleen
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sucker View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote sucker Quote  Post ReplyReply Direct Link To This Post Posted: 16/March/2005 at 11:49am

If I'm not mistaken you will get them from the original owner of the loan, IE Federal Government or the bank you should get two since you loan would be split up, once you default on it.

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hunter View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote hunter Quote  Post ReplyReply Direct Link To This Post Posted: 17/March/2005 at 6:52pm
I am paying money to HRSDC for my loans.
For 2004, they sent me a statement detailing the amount of interest that I paid.
It was not much, but this year is going to be better.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote dawnbh Quote  Post ReplyReply Direct Link To This Post Posted: 18/March/2005 at 12:17pm
I hear ya!  I paid out so much in interest. Maybe because it was my first year paying back...and I was making interest only payments to CIBC.  Helped me get back $387 from my income tax though.  It will help me pay down my Visa balance.  No fun for me!
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Post Options Post Options   Thanks (0) Thanks(0)   Quote hunter Quote  Post ReplyReply Direct Link To This Post Posted: 29/March/2005 at 9:16am
Dawn

Hey at least you got some money back. I owed $ 365.
I wish I was getting money back so that it would go towards paying back my student loans.
Oh well, there is always next year.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Tangotori Quote  Post ReplyReply Direct Link To This Post Posted: 04/April/2005 at 3:18pm

It's pretty sad but for years (I've been paying my loans since '98) I didn't pay attention to where the "interest paid" reciepts came from - I just claimed them on my tax returns each year. But this year I looked and started to wonder... (keeping in mind that all my loans are in collection) I got a reciept from HRSDC and another from the agency representing the Prov. Govt (BC). But I didn't receive (and, come to think of it, didn't last year either - don't remember other years) a receipt from the agency handling my non-guaranteed bank portion loans. I'm curious... wouldn't all interest paid, whether for guaranteed loans or non-guaranteed loans, be elegible for this credit? I'd like to be sure before I give them a call! Hope someone can answer...

Thanks... Tangotori

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Mrs. D View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Mrs. D Quote  Post ReplyReply Direct Link To This Post Posted: 06/April/2005 at 12:05pm

I heard the worst news ever. After paying $380 towords my student loan 2003 ( which is in collections) i heard from a collection rep that because i'm paying to a three party (them} they don't issue tax receipts anymore.

 

Mr. D

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hunter View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote hunter Quote  Post ReplyReply Direct Link To This Post Posted: 06/April/2005 at 2:40pm
Mrs. D.
In that case, I would tell the collection agency that you will no longer be paying them, but you will pay the bank directly.
I have told this to collectors as well.
I refuse to deal with collection agencies.
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Mrs. D View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Mrs. D Quote  Post ReplyReply Direct Link To This Post Posted: 06/April/2005 at 2:49pm

can you really do that

 

 

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hunter View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote hunter Quote  Post ReplyReply Direct Link To This Post Posted: 06/April/2005 at 3:02pm
It is your money, so why the hell not.

I was dealing with a debt once from Zellers, and the collector was downright rude and ignorant to me. I told Zellers that I would pay them and only them, and said it was my way or the highway. And they accepted it.
The collector did not get her commission.

When it comes time for me to pay the bank for their portion of it, I will be paying the bank and not the collection agency.
If they want their money it will be on my terms.
I am tired of collectors treating me like I am a piece of doggy poo!!

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Post Options Post Options   Thanks (0) Thanks(0)   Quote WantOut Quote  Post ReplyReply Direct Link To This Post Posted: 09/April/2005 at 8:14pm
I'm with you, Hunter!  And do I ever find it amusing when I can make a collector feel like doggy poo for a change!!  After a LONG time stressing, I now try to find ways to see the humor in my situation (NOT easy most of the time, believe me ...), and if that humor comes at the expense of those poor l'il collectors, well .... I'll just have to try to live with that!!!
In order to discover new lands, one must be willing to lose sight of the shore for a very long time.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote stressedmomma Quote  Post ReplyReply Direct Link To This Post Posted: 18/April/2005 at 7:12pm

 

I also did the same with a retail card that went to collection. They were rude to me and obviously weren't trustworthy. (At one point they were sending me statements showing more owing than the actual credit card statement - like $680 for a $400 debt.)

 

So I stopped dealing with them and dealt directly with the company. What is the collection agency's role if you are paying the company regularly? Nothing. They can't phone you up and say, "Hey, you're not paying!"

 

 

 

 

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MegaPo View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote MegaPo Quote  Post ReplyReply Direct Link To This Post Posted: 19/April/2005 at 4:10pm
We missed Mrs. D's question:

She said she paid $380 against student loans in 2003, but was told that no receipt (for income tax filing) would be issued. She said that the reason was because the payment(s) went to a third-party collector, not the lender.

The rule: You can claim all money paid (within that calendar year) to offset the principal debt or interest of a statutory student loan.

To explain...
"You can claim..." means that you are reporting (on your income tax return) that you spent some of your income on repayment of student debt. You receive a non-refundable tax credit equal to about 16% of the amount you paid. In your case, 16% x $380, or $60.80, would be applied as a payment to your tax due, if you earned income that year.

"...all money" means all money paid in that year! It doesn't matter if you gave the money to a bank, a government, or a collection agent. Whoever applied your payment against your debt must provide you with a receipt for income tax filing.

"...statutory student loan" = a loan granted under a government student-loan program. Note that some banks have a so-called "student line-of-credit" that only students can get, but these are not statutory student loans -- you pay tax on them just like a plain ol' car loan!

Okay, so that's the rule. It doesn't help you much if you can't get the receipt for tax filing! Ask for it and ask for it again. Perhaps one reason this collector says that a receipt won't come is because it old (2003?). Or maybe the collector doesn't know and is just making up answers.

Just keep asking. If they won't give you one, then call everybody including the bank, the collector, and CCRA. CCRA enforces the rules about issuing notices for things like this.

If you still have no luck, try this with the collector:
"During repayment of any student loan, receipts are issued each year for income tax purposes. At this time, no receipts have arrived for my payments previously provided. Therefore, it is unclear whether or not my payments have been applied to my student loans. Payments cannot continue until it can be verified that the funds are directed correctly. I trust we can resolve this error very quickly, so payments may resume."

Here's why it works: Collectors collect. That's all they do. When they get your payments from you, they turn their efforts to someone who isn't paying. They have no incentive to do "customer service" crap, like chase down your 2-year-old receipt for $380!! But tell a collector that the payments have to stop until some paperwork problem is fixed, then your little paperwork problems get fixed!

But call the bank anyway... It's their responsibility, and the collector might not know how to fix your problem.

--MegaPo
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Post Options Post Options   Thanks (0) Thanks(0)   Quote polyhymnia61 Quote  Post ReplyReply Direct Link To This Post Posted: 20/April/2005 at 12:24am

Yep, MegaPo right. Regardless of whom I paid, I always received my two receipts at tax time: one from the CIBC and one from HRSDC.

Good luck, Ms. D...

Poly

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Mrs. D View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Mrs. D Quote  Post ReplyReply Direct Link To This Post Posted: 20/April/2005 at 6:22am

Thank you so very much

 I will be giving HRDC a call this morning

will keep you posted

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Post Options Post Options   Thanks (0) Thanks(0)   Quote Mrs. D Quote  Post ReplyReply Direct Link To This Post Posted: 22/April/2005 at 10:02am

Good morning everyone

i spoke to HRDC this morning

they confirmed what i was told by the collection agent

they said because my loan went default i will not be getting a receipt because my s/l is at collection.

So according to this person at the HRDC even if i paid off my loan this year i would no receipt. She said, think of it as paying a car loan you wouldn't get a receipt for that to claim on your taxes.

Now isn't that great

 

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masy View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote masy Quote  Post ReplyReply Direct Link To This Post Posted: 25/April/2005 at 8:40am

That doesn't make sense. My loan is with three different collection agencies and I get a tax receipt from the CIBC student centre. Is your loan a student line of credit or did it come from the CIBC National student loan centre. If if came from the latter, call them, they are the ones who issue the receipts, because collection agencies are collecting for them.

I've tried to get answers and clarification many times from HRDC, but honestly they are as useless as tits on a bull.

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MegaPo View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote MegaPo Quote  Post ReplyReply Direct Link To This Post Posted: 25/April/2005 at 4:05pm
Okay, something is really wrong here. This shouldn't be much of a fight. Just about everybody who works with student loans knows that the student gets a receipt for interest paid.

Sure, it's possible to find somebody who doesn't know, but I'm surprised it was someone who deals with student loans at HRDC. (Umm... HRSDC?)

If your facts are correct, then stick to your guns:

Statutory student loans are not like car loans. No, you can't claim car-loan interest payments on your tax return, but there is a specific law that permits claims for interest paid on statutory student loans.

  • It was Section 38(1) of Income Tax Amendments Act, 1998. It is part of the Canadian Income Tax Act, Part I, Division E, Subdivision A, Section 118.62.

  • Not that you can tell anybody to look it up -- they won't bother! Tell them that it is Line 319 on the federal income tax return. You won't find "interest on car loans" there!

  • You should read the information pamphlet for Line 319. Make sure you're right about this.
    Pamphlet P105


    Say... Is there a chance you are wrong about this? Check to be sure:

  • The tax receipt is for money paid toward interest on student loans, not for money charged as interest. It's a common mistake. (My next post will show an example.)

  • Did you get a judgment against you after defaulting? See, it doesn't matter if you defaulted, but it does matter if you're paying a judgment after being sued for defaulted debt. (This probably didn't happen with a federal loan.)

    Keep at it! You shouldn't have to argue with anyone about this. Stay calm and professional, but keep calling back (HRSDC, collectors, bank...). If you're in the right, you'll get your receipt eventually.


    Oh!... Tax trivia: You can file your "T1 Individual Tax Return" form before April 30, and then get your receipt, and then file a "T1 Amend" to get your fair credit. It is better to do it this way than to be late with your tax return!!

    That's a lot of work for $60.80, ain't it?

    --MegaPo
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    MegaPo View Drop Down
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    Post Options Post Options   Thanks (0) Thanks(0)   Quote MegaPo Quote  Post ReplyReply Direct Link To This Post Posted: 25/April/2005 at 4:33pm
    Regarding Line 319 of your Individual Income Tax Return form... Sometimes people confuse the interest paid on student loans with interest charged on student loans. Only paid interest can be claimed on your tax return.

    Let's say you had a loan balance of $10,000 at the beginning of 2003, but you didn't make a single payment all year. At the end of 2003, you might get a statement that says you were charged a total of $950 in interest during that year, so your 2003 year-end balance is a total of $10,950.

    Some people have assumed they can claim the $950 in interest charges in Line 319 on the 2003 tax return. That's not how it works. (If you didn't pay, then you don't get the tax break.)

    Now suppose you made a payment of $1,000 on the first business day of January of 2004. You would clear the $950 interest (which had accumulated in 2003) and you would reduce the principal debt by $50, so your new balance is $9,950.

    In this case, you may claim the $950 payment, because it is an actual payment of accumulated interest. But hang on! You claim this $950 payment on your 2004 tax return, because the payment was made in 2004. It doesn't matter that you were paying off the interest that had accumulated in 2003.

    Simple: You can claim (Line 319) the money you paid against the interest on your statutory student loans. You claim it in the year you paid it.

    Can't get a receipt for an actual payment of interest? Ask for a statement of account for the period of January to December of that year. Insist on it! Locate your payments on the statement -- see how much of each payment went to principal and how much went to interest. Find the total of your actual payments that went to interest. Report that "total interest paid" on Line 319 and include COPY of the statement and a brief letter explaining that the account holder refused to issue a receipt. File your tax return on time!

    --MegaPo
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    Johnny View Drop Down
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    Post Options Post Options   Thanks (0) Thanks(0)   Quote Johnny Quote  Post ReplyReply Direct Link To This Post Posted: 25/April/2005 at 7:20pm

     

     Mrs. D,

     1) If you have a Canada Student Loan with a judgment anchored, you cannot claim the interest.

     2) If you have not paid any interest, you cannot claim something that has not been paid.

     If you are paying toward a guaranteed Canada Student Loan, and they are refusing to give you a tax reciept when you are actually due one, you come to me and I will go get one for you. If you are truly due one, they cannot refuse this.

     Johnny

     

     

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