The IRS has a gift for you In this case, the gift is for a college student, or someone
preparing to attend college for the first time. The gift will likely be more of a benefit to parents and/or guardians who may want to claim an exemption for their young adult attending college.
For those who file tax returns and itemize, there are three education tax benefits available:
American Opportunity Credit
This credit can be up to $2,500 per eligible student and is available for the first four years of post secondary education at an eligible institution. Forty percent of this credit is refundable, which means that you may be able to receive up to $1,000, even if you don’t owe any taxes. Qualified expenses include tuition and fees, course-related books, supplies, and equipment.
Lifetime Learning Credit
With this credit, you may be able to claim up to $2,000 for qualified education expenses paid for a student enrolled in an eligible educational institution.
Student Loan Interest Deduction
You may be able to deduct interest paid on a qualified student loan during the year. It can reduce the amount of your income subject to tax up to $2,500, even if you don’t itemize deductions.
Please be aware that these education benefits are subject to income limitations, and may be reduced or eliminated depending on your income.
For more detailed information, go to the Internal Revenue Service website at IRS.gov Click on Tax Benefits for Education Information Center and check out Publication 970, Tax Benefits for Education. This publication can be downloaded at the IRS.gov website, or you can order the publication by calling the IRS publications hotline At 1 (800) 829-3676.
Photo Courtesy of BIGSTOCK
