- Days left

4 Tax Breaks Every College Student Should Know About

×
College tax breaksBy Mandi Woodruff

A recent report by the New York Federal Reserve Bank shed a sobering light on how much debt Americans will carry with them into the new year.

Though they managed to end the third quarter of 2012 with a $74 billion lighter debt load overall, consumers upped their non-mortgage credit debt by another $2 billion and took on $42 billion in new student loans.

Heading into tax season, it's the student loan figure that is possibly most troubling. It was only last spring that the U.S. Government Accountability Office found Americans managed to leave behind nearly $800 million worth of college tuition tax benefits in 2009 -- an average of $466 per person.

With the national student debt already past the $1 trillion mark, we figure now is a good time to revisit some of the most lucrative tax breaks out there for college students.

• American Opportunity Credit. Students are eligible to claim up to $2,500 for the first four years of post-secondary education. And since 40 percent of the credit is refundable, that means students can get back up to $1,000 on their refund -- even if they don't owe any taxes, according to the IRS. What qualifies: Tuition and fees, course related books, supplies and equipment. Income: Couples filing jointly who earn less than $160,000; single-filers who earn less than $80,000.

• Lifetime Learning Credit. For students earning less than $60,000 (single-filers) or $120,000 (married, filing jointly), they can claim up to $2,000 education-related expenses.

• Tuition and fees deductions. Like the American Opportunity Credit, students earning less than $80,000 (single) or $160,000 (married, filing jointly) can deduct up to $4,000 in tuition and fees on their annual tax returns. Use it while you can -- this tax break is set to expire at the end of 2013, unless lawmakers extend it.

• Student loan interest deduction. If you've taken out a federal or private student loan, you're eligible to deduct up to $2,500 worth of interest paid on the loan as an "above-the-line" exclusion from your income. You don't have to itemize your deductions in order to claim it.

Note: College students can only claim one of the above tax credits per year, but parents supporting more than one child in college can claim tax credits on a per-student basis.

See more on Business Insider:


Increase your money and finance knowledge from home

Introduction to Retirement Funds

Target date funds help you maintain a long term portfolio.

View Course »

Understanding Credit Scores

Credit scores matter -- learn how to improve your score.

View Course »

TurboTax Articles

2014 Tax Forms for Federal and State Taxes

TurboTax software programs include the tax forms you're likely to need to file your federal and state taxes. And the great thing is they guide you through your tax return so you don't need to know which tax forms to file.You can also find all federal forms and state tax forms at the links below.

What is a 1098-C: Contributions of Motor Vehicles, Boats and Airplanes

When you donate a vehicle to charity, you may be able to deduct it as a charitable contribution if you itemize your deductions. Soon after donating a vehicle, boat or airplane, the charitable organization may send you a Form 1098-C that reports details about the donation that may impact your deduction. In some cases, the Internal Revenue Service may deny your deduction without Form 1098-C attached to your return, so keep it in a safe place.

Add a Comment

*0 / 3000 Character Maximum