Income tax credit for interest on loans

long story short...

CIBC put my loan into default and it is now being handled by a credit co. I have made regular monthly payments since May (2003). A recent copy of my credit report indicates that CIBC has failed to report any of my payments and has given this account an I-9 standing.

Then I receive a statement from CIBC which indicates the amount of interest paid on the loan for 2003 to be used as a income tax credit. By sending me this aren't they acknowledging that I have been paying money towards the loan? Does anyone know more about how this tax credit on interest work? If anyone can help out or refer me to where I could get more info, I would appreciate it. Thanks

Yes, that is the thinking behind the tax credit.  Unlike other loans,  the interest you pay on these student loans provides a credit for your income taxes.  The idea is that a student-debtor should not pay income tax on the income that was used to pay student-debt interest.

It doesn't quite work that way, because the tax credit is 16% of the interest you paid, even though some people pay income tax at higher rates (like, 29%) on some of their income.  No matter how much money you make, the tax relief is, at most, 16%.  (And if you don't make much money, you wouldn't be paying income tax anyway, so the tax credit is 0% in that case.)

But I don't think that is what "i hate cibc" was asking.  I suspect that the question comes from the inconsistency between two documents:

  1.)  The credit report is heavily derogatory, with several I-9 ratings.  Nothing on the report reveals any payments to CIBC in 2003;

         BUT!:

  2.)  The "official receipt" for interest paid on student loans provides a total of the interest payments made in 2003.  (And that total ain't zero!!)

Is this what you were asking?  Like, you know you paid interest in 2003, you have a receipt for those payments, but your credit report shows a history of non-payment.  Is that what you mean?

I don't know what to tell ya, Dude.  (Yer a dude?  Both men and women hate CIBC, so I can't tell by your username!)  Obviously, the official receipt is the important document for you, especially when filing your taxes.  Plus, you know that the receipt is correct, because you made those payments.

And if true, then your credit report is inaccurate.  Specifically, the report is worse than the truth.  Trust me, I emphathize with you.  CIBC, Edulinx, and Equifax are the foxes in charge of this hen-house, I'm afraid.

Maybe somebody else wants to post advice about how to handle unfortunate credit bureau entries.  I'm not very effective in that area.  However, if you're wondering how to get maximum value for your tax credit (for your 2003 interest payments), then I can post that info for you.

Chin up!

--Sean