12/14/2017

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Tax Breaks For Students

Tax Breaks and Credits For College Tuition And Expenses

With the costs of a college education getting higher and higher by the year, most students and their parents are constantly on the look out for ways to make tuition costs more affordable. There are some tax breaks and credits for college expenditures that can add up to great savings.

Life on campus can be taxing but it doesn't have to be taxing for those paying the bills. Most students need all the help they can get, including tax breaks, to complete their education. Sky high tuition, text books, living arrangements, and travel expenses getting back and forth to school all have a devastating affect on the pocketbook.

Can you deduct your student's expenses? The income tax code offers several breaks for college education that, while not offering a complete solution for paying for college, makes it easier to help pay the high cost of tuition.

Tax breaks can help ease the pain of getting an education but sifting through the tax code is not an easy task. It takes IRS Publication 970, Tax Benefits for Education, 84 pages to explain the benefits but they are there.

Listed below are some of the credits you can claim on your taxes:

Lifetime Learning Credit: You can receive up to $2,000 for qualified education expenses as long as you take one or more classes. This credit can be claimed only once per return but can be claimed each year as long as the student attends college. Qualified expenses for the Lifetime Learning Credit include the cost of courses that aren't part of a degree or certificate program. This means that you are eligible for this credit if you work and take college courses over time to strengthen your job skills.

Student Loan Interest Deduction: You may be able to deduct up to $2,500 if you are paying back student loans used to pay for higher education. You can deduct this amount per return for each year.

Tuition and Fees Deduction: Depending on your income level, you may be eligible to claim up to a maximum of 100 percent of qualified higher education expenses. They maximum you can claim is $2,000 or $4,000 depending on your taxpayer's filing status. As long as you take one or more classes, there is no limit on the number of years this deduction can be taken.

American Opportunity Credit: This credit gives eligible taxpayers the ability to claim up to $2,500 for each of the first four years of college per student. It is 40% refundable and up to $1,000 may be refunded to the taxpayer even if there is no tax liability.

Employer-provided Educational Assistance: You can exclude up to $5,250 of educational assistance benefits you receive from your employer each year.

Important Note: The above deductions and credits are not cumulative. You should review the rules to each benefit and decide which is most beneficial to you.

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