With alarming spikes in tuition, college students and their parents are wondering if a higher education is obtainable only to the wealthy. However, there’s hope on the horizon. Uncle Sam is lending a hand with several tax breaks that could save families thousands.
Whether you’re a college student and claiming yourself this year, or you’re a parent who has a child in school, check out these tax breaks that are sure to pick up on some of the tuition tab:
The American Opportunity Credit is similar to 2009′s Hope Credit, but even better. The credit was created to offset the increasing costs of tuition, and it provides up to $2,500 per college student. It allows taxpayers to claim tuition and certain fees for higher education, but these expenses can only be claimed for the first four years of college. Parents can receive a credit of up to $7,500 if they claim three qualifying college students.
The Lifetime Learning Credit is a tax break for any kind of higher education, but is ideal for those who don’t qualify for the American Opportunity Credit. This credit also allows taxpayers to claim tuition and other fees. Perfect for grad students, it gives up to $2,000 per taxpayer.
Careful: You can’t claim both tax credits in the same year.
The tuition and fees deduction is obtainable even for those who don’t itemize. Students or parents could receive up to $4,000 if requirements are met. The catch with this deduction is that taxpayers can’t receive both a credit and a deduction. Be sure to find out which tax break will be more lucrative.
The student loan interest deduction can knockoff up to $2,500 of the taxpayer’s taxable income. Though most interest paid isn’t tax deductible, student loan interest, along with mortgage interest, is.
The last day to file your return is April 18. To see if you qualify for any of these tax breaks, inquire with your preparer.