- 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

Getting out of debt

Everyone hates debt. Get out of it.

View Course »

Economics 101

Intro to economics. But fun.

View Course »

TurboTax Articles

Will Medicare/Medicaid be Impacted by ACA?

The Affordable Care Act put in place significant tax-related programs that impact Medicare and Medicaid, such as increased Medicare taxes on earned and unearned income for high-wage earners, and Medicaid changes that increase the number of insured individuals. Establishing whether you are affected by the ACA-imposed taxes, or are eligible for certain health programs that fall under the Centers for Medicare and Medicaid Services, is determined by filing your income tax.

8 Things You Think Are Tax Deductible That Aren't

There?s a fine line between looking to save money on your taxes and taking deductions that will raise eyebrows at the Internal Revenue Service. Some taxpayers are tripped up by expenses that they assume are tax deductions, but don?t qualify under IRS guidelines. Here are a dozen items that can lead to unpleasant surprises in case of an audit.

Essential Tax Forms for the Affordable Care Act

The Affordable Care Act (ACA), also referred to as Obamacare, affects how millions of Americans will prepare their taxes in the new year. The law now includes penalties for all who haven?t obtained health insurance -- and those penalties are expected to be paid at tax time. The ACA also provides tax credits to help people pay for insurance, and you can claim those credits when you file your taxes. The Internal Revenue Service (IRS) has introduced a number of tax forms to accommodate the ACA.

How to Determine if You Have Minimum Essential Coverage (MEC)

The Affordable Care Act, also known as Obamacare, requires most Americans to have health insurance that meets a government standard known as "minimum essential coverage," or MEC. Whether your insurance qualifies as MEC depends not on the plan itself, but on how you obtained your coverage.

What are 1095 Tax Forms for Health Care?

In 2014 the Affordable Health Care Act, also known as Obamacare, introduced three new tax forms relevant to individuals, employers and health insurance providers. They are forms 1095-A, 1095-B and 1095-C. These forms help determine if you need to comply with the new shared responsibility payment, the fee you might have to pay if you don't have health insurance. For individuals who bought insurance through the health care marketplace, this information will help to determine whether you are able to receive an additional premium tax credit or have to pay some back.

Add a Comment

*0 / 3000 Character Maximum