• Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • College Financial Aid
    • Financial Aid for College
    • Student Financial Aid Eligibility
    • Student Financial Aid
      • Student Loans for College
      • College Financial Aid 101
      • Need Based Student Loans
      • Financial Aid Forms (FAFSA & College Board’s Profile)
      • Military Student Financial Aid
        • College Benefits for Active Duty Military
        • National Guard Education Benefits
        • College Aid for Military Reservists
        • College Aid for Military Veterans
        • Military Dependent Financial Aid
    • Financial Aid Programs
    • Paying for College
  • Scholarships 101
    • College Scholarships (Overview)
    • College Scholarship Applications
    • College Scholarship Essay Writing Tips
    • Unusual Scholarships
    • Unclaimed Scholarships
    • Free College Scholarship Searches
  • Find a Scholarship
    • Latest Scholarship Postings
    • Student Scholarships by College Major
    • Scholarships for Hobbies and Interests
    • Sports Scholarships
    • Community Service Scholarships
    • Association Sponsored Scholarships
  • Find a Student Loan
    • Private Student Loans
      • Sallie Mae Student Loans
      • PNC Student Loans
      • Charter One Student Loan
      • Wells Fargo College Loan Programs
      • Texas Dow Employees Credit Union Loans
      • SunTrust Education Loans
    • How Do Student Loans Work?
    • Types of Private Student Loans
    • Student Loans to Cover Living Expenses
    • Private Student Loan Interest Rates
    • Graduate Student Loans from Private Lenders
  • Saving for College
  • Site Map

Financial Aid Finder

Your Guide to Maximizing your College Financial Aid

Financial Aid Finder HomePage
You are here: Home / Federal Aid / Tax Credits & Deductions for Students

Tax Credits & Deductions for Students

February 25, 2012 By mara

It’s tax time and if you’re a student, there is some good news for you. The Federal Government offers a host of tax credits and deductions for college and graduate students — or your families, if your parents still claim you on their tax returns. Here’s a look at some of the ways you can save money — or get money back — on your tax returns.

Tax Credits
A tax credit directly reduces your tax liability, often times regardless of your income tax bracket.

>> Hope Scholarship Tax Credit
If your parents claim you as a dependent, they can get a tax credit of up to $1,500 per year toward the first two years of college. To be eligible, your parents must have paid at least that much toward tuition and fees for your education expenses, and you must be enrolled at least part-time in an accredited degree program.  The credit phases out for individuals with a gross adjusted income of more than $50,000 a year ($100,000 per year for a couple filing jointly.)

For more information, see the IRS webpage on Education Credits and consult with the person preparing your tax return.

>> Lifetime Learning Tax Credits
If you pay for your education costs yourself, you may claim up to $2,000, or 20% of allowable education expenses. In other words, to claim the full $2,000 credit, you must have paid at least $10,000 in tuition and fees. If you paid only $5,000 in tuition and fees, you could claim only a $1,000 credit.

Unlike the Hope Credit, you don’t need to be enrolled at least part-time. Allowable expenses are tuition and fees; books, supplies and living expenses are excluded.  If your parents pay for at least half of your schooling and still claim you as a dependent, they are entitled to the credit on their tax returns.

You cannot claim both the Hope and the Lifetime Learning Tax Credit in the same year.

For more information, visit the IRS webpage on Lifetime Learning Tax Credits or discuss your eligibility with your accountant.

Tax Deductions
A tax deduction is a write-off or reduction in your gross income on which tax is calculated. A deduction reduces your tax burden by lowering your income bracket.

>> College Tuition Deduction
If you pay for college tuition and fees for yourself, your spouse, or your dependents, you may be able to deduct up to $4,000 of your total allowable expenses. This deduction does not have to be itemized.  The deduction is phased out, starting with gross adjusted incomes of more than $65,000 per year for single filers or $130,000 for couples filing jointly.

You can not claim a deduction for any expenses paid with earnings from a college savings account, such as a 529 Plan or a Coverdell Education Savings Account (also known as an Education IRA).

You cannot claim the deduction in same year that you claim the Hope or the Lifetime Learning Tax Credit.

For more information on education deductions, see the IRS webpage on tuition and fee deductions or check out this January article from Smart Money on tax breaks for education.

>> Student Loan Interest Deduction
If you are repaying student loans for yourself, your spouse or your (claimed) dependent, you may be eligible to deduct up to $2,500 of the interest paid. You must have paid interest on a qualified student loan last year and have a gross adjusted income of less than $70,000 ($145,000 if you are married filing jointly). You are not eligible for the deduction if your filing status is married filing separately.

To learn more about deducting your student loan interest, see the IRS webpage on this topic or contact the person helping you to file your tax return.

Sallie Mae Student Loans Ad

Filed Under: Federal Aid, Financial Aid News Tagged With: education tax credits, education tax deductions

Primary Sidebar

FinancialAidFinder Logo
Sallie Mae Student Loans Ad

Latest Scholarship Postings

Systems Consultants Scholarship (Deadline: March 31, 2023)

March 18, 2023 By The FinancialAidFinder Scholarship Team

Reno and Gloria Quilici Scholarship (Deadline: April 1, 2023)

March 18, 2023 By The FinancialAidFinder Scholarship Team

Nevada Air National Guard Scholarship (Deadline: April 1, 2023)

March 21, 2023 By The FinancialAidFinder Scholarship Team

General Fred Michel Memorial Scholarship (Deadline: March 31, 2023)

March 18, 2023 By The FinancialAidFinder Scholarship Team

More Scholarship Listings

Sallie Mae Student Loans Ad

Explore Financial Aid Finder

  • College Financial Aid
  • Saving for College
  • Military Financial Aid
  • Grants for College
  • Student Scholarships
  • Student Scholarship Search
  • Find Student Loans
  • Financial Aid Info
  • Register to Receive College Financial Aid Updates
  • About FinancialAidFinder
  • Contact Us

Tags

529 plans applying for scholarships college college financial aid college savings plan college savings plans college scholarship college scholarships college student loans college tuition community college debt distance learning education engineering scholarship essay scholarships expected family contribution FAFSA federal student loans financial aid financial aid application financial aid eligibility free money for college GI Bill grant Grants hispanic scholarships minority scholarships Pell Grant Pell Grants private student loans reduce cost of college saving for college scholarship scholarship applications scholarship essays Scholarships scholarships for college student financial aid student loan student loan consolidation student loan debt Student Loans Info tuition work study

Footer

About FinancialAidFinder
Contact Us
Privacy Policy
Cookie Policy

Scholarship Submissions

If you offer a college scholarship, you can submit it to us through this form:

Scholarship Submission Form

Copyright © 2023 · FinancialAidFinder - All rights reserved.