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    sumesh11's Avatar
    sumesh11 Posts: 7, Reputation: 1
    New Member
     
    #1

    Feb 19, 2008, 11:02 PM
    Deduction on Education loan paid in India
    I am currently on H1B in USA. I have paid around $3000 in 2007 in my education loan in India. Can I get any deduction on that?
    They loan was taken in india in a indian bank

    Thanks
    Sumesh
    charlotte234s's Avatar
    charlotte234s Posts: 1,903, Reputation: 143
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    #2

    Feb 20, 2008, 01:11 AM
    Paying back a loan does not constitute getting a tax deduction, no.
    IntlTax's Avatar
    IntlTax Posts: 831, Reputation: 23
    Tax Expert
     
    #3

    Feb 23, 2008, 02:06 PM
    Sorry, no deduction for the interest on the education loan. Also, there is other bad news. If you reside in the U.S. and the lender is a foreign bank, then you are required to withhold 30% tax on the interest portion of the payments, unless a lower treaty rate applies (10% or 15% for India). If you want to rely on the treaty, you need to obtain a Form W-8BEN from the foreign bank where the bank certifies that it qualifies for treaty benefits. In either case, you will need to also file Form 1042 and 1042-S reporting that you made interest payments to foreign persons.

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