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Let the IRS Help Pay for Your Higher Education

IRS pay for collegeThe cost of getting an education has never been higher. But by taking advantage of some tax benefits that Uncle Sam provides, you can at least put a small dent in some of those costs.

Unfortunately, figuring out which tax benefits apply can be complicated. Let's take a look at the many provisions that help college students.

American Opportunity Tax Credit

Students can get a credit of up to $2,500 for each of the first four years of a college education. If you earn less than $90,000 as a single person or $180,000 if you file jointly, then you can claim 100% of the first $2,000 and 25% of the next $2,000 you pay on your tuition, fees, and other qualifying expenses.

Up to $1,000 of the credit is refundable, meaning that even if you don't otherwise owe tax, the IRS will cut you a check for that amount. These provisions are temporarily higher through 2012, after which they're scheduled to get cut back.

Lifetime Learning Credit

In addition to the American Opportunity Tax Credit, the Lifetime Learning Credit offers 20% back on the first $10,000 of annual educational expenses paid. Different income limits apply, though, with the benefits completely phased out at $62,000 of income for singles and $124,000 for joint filers.

The Lifetime Learning Credit doesn't have to be used for the first four years of college, however. It's available for graduate school as well as job training and other classes taken to acquire or improve job skills. Note, however, that you can't claim both credits for the same student in the same year.

Tuition and Fees Deduction

Students are entitled to a deduction of up to $4,000 for educational expenses. This is a deduction rather than a credit, but it comes with higher income limits than the Lifetime Learning Credit -- $80,000 for singles and $160,000 for joint filers.

Depending on your tax bracket and how much you spent on education, the deduction may be a better bet than the credit. Note, though, that you can't claim both this and one of the two credits above.

Student Loan Interest Deduction

Even if you're done with school, you may be able to deduct interest you pay on your student loans. If you're single and earn $75,000 or less ($150,000 for joint filers), then you can deduct up to $2,500 in student loan interest every year.

To qualify, you need to have been enrolled at least half-time when you took the loan. Also, the money must have gone toward tuition and related expenses, which include room and board.

Get Your Fair Share

Each of these provisions has its own additional requirements, so you'll want to consult with a tax professional or do further research to learn more. However, when it comes to paying for college, every little bit helps, so stake your claim to Uncle Sam's tax benefits this year.

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mrmsinger

I see how each "break" does Is forbidden to certain Americans. It used to be if you were a minority, you were banned from enjoying certain privelges and immunities. That was deemed illegal. But it appears to me that if you are successful at what you do, or provide a product or service that people demand, you are punished and discriminated against.

February 20 2012 at 11:12 AM Report abuse +1 rate up rate down Reply
mrmsinger

I see how each "break" does Is forbidden to certain Americans. It used to be if you were a minority, you were banned from enjoying certain privelges and immunities. That was deemed illegal. But it appears to me that if you are successful at what you do, or provide a product or service that people demand, you are punished and discriminated against.

February 20 2012 at 11:11 AM Report abuse rate up rate down Reply
Karen Binkwaters

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February 18 2012 at 3:04 AM Report abuse rate up rate down Reply
sluckyone38man

when the credit is available for aii tax payers they have to make it public so everyone can understand and claim it or they would have to send a check to everyone who do not know about what's available for them in i r s.

February 17 2012 at 11:00 PM Report abuse rate up rate down Reply
ajt1025

Yeah this article is right on target. NOt

February 17 2012 at 8:41 PM Report abuse +1 rate up rate down Reply
ralphalmaraz

u think americans want to work for their money or schooling? not the obammyway

February 17 2012 at 8:34 PM Report abuse +1 rate up rate down Reply
red

WHY ALLOW THE GOVT TO SUBSIDIZE THOSE POINTY HEADED PROFESSERS THRU STUDEN LOAN PTROGRAMS DESIGNED TO HELP THE STUDENT DEFAULT AND FORCE US TAX PAYERS TO PAY THE SALARIES OF DEANS AND ASSISTANTS AT PLACES LIKE HARVARD AND PRINCETON?

February 17 2012 at 8:10 PM Report abuse +1 rate up rate down Reply
red

WHY ALLOW THE GOVT TO SUBSIDIZE THOSE POINTY HEADED PROFESSERS THRU STUDEN LOAN PTROGRAMS DESIGNED TO HELP THE STUDENT DEFAULT AND FORCE US TAX PAYERS TO PAY THE SALARIES OF DEANS AND ASSISTANTS AT PLACES LIKE HARVARD AND PRINCETON?

February 17 2012 at 8:10 PM Report abuse +1 rate up rate down Reply
red

WHY ALLOW THE GOVT TO SUBSIDIZE THOSE POINTY HEADED PROFESSERS THRU STUDEN LOAN PTROGRAMS DESIGNED TO HELP THE STUDENT DEFAULT AND FORCE US TAX PAYERS TO PAY THE SALARIES OF DEANS AND ASSISTANTS AT PLACES LIKE HARVARD AND PRINCETON?

February 17 2012 at 8:10 PM Report abuse +1 rate up rate down Reply