There are specific credits and deductions available to help with the cost of education. Most education tax credits are taken by parents. If you’re the student, you must pay your own college expenses, file your own return, and not be a dependent on anyone else’s return, in order to claim these tax breaks. Here’s how you can help with the cost of education on your taxes.
1. The American Opportunity Tax Credit
For undergraduates, the American Opportunity Tax Credit gives up to $2,500 in tax credit per student. It only applies to the first four years of higher education, but can be used toward required course materials along with tuition and fees. Depending on your adjusted gross income (AGI), up to 40% of the credit can even be refundable. Just tell us about your student and your expenses, and we’ll calculate all of that for you.
2. The Lifetime Learning Credit
If you’re a graduate student, or are taking post-secondary courses but not pursuing a degree, the Lifetime Learning Credit can give you up to $2,000 in tax credit. It allows you to claim up to 20% of your out-of-pocket college expenses, even if you only took one class this year. There are income limits and filing status restrictions for claiming the credit, but we’ll determine your eligibility and calculate everything for you.
3. The Student Loan Interest Deduction
Both parents and students can deduct up to $2,500 of interest on student loans with the Student Loan Interest Deduction. Your Form 1098-E reports the amount of interest you paid last year if it was more than $600. There are filing status restrictions and income limits for taking the deduction. Just enter the info from your 1098-E and we’ll determine how much you’re eligible to deduct.
4. The Tuition and Fees Deduction
This deduction allows eligible taxpayers to deduct up to $4,000 in education expenses for themselves, their spouses, or their dependents. You don't need to itemize to get the deduction. You're eligible for this deduction if you don't qualify for the American Opportunity Credit or the Lifetime Learning Credit, unless:
- You’re filing as single or head of household and your AGI exceeds $80,000.
- You’re filing jointly and your combined AGI exceeds $160,000.
- You’re filing separately from your spouse.
- Someone else, such as a parent, is eligible to claim you as a dependent on their tax return (whether or not they actually do it).
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You need to provide more info, particularly you age and dependent status and whether you have income or are just expecting a refund for paying tuition.
There's a new urban myth among college students that says they can get a $1000 from the government just for filing a tax form. For most of them, they simply aren't eligible. A full time unmarried student, under age 24, is only eligible for the refundable portion of the American Opportunity Credit if he supports himself by working. You cannot be supporting yourself on parental support, 529 plans or student loans & grants. You usually must have actually paid tuition, not had it paid by scholarships & grants. It is usually best if the parent claims that credit.
You cannot claim a credit if you are, or can be, claimed as a dependent by someone else.