Tax Breaks for Your Tuition
Every year when tax season rolls around, you can qualify for tax credits or deductions on eligible tuition costs and student loans.
Didn’t know that? Now you do.
Here are the three programs that can save you thousands of dollars in taxes.
Hope Scholarship Credit
Taxpayers during 2009 and 2010 tax years can receive a $2,500 tax credit on qualifying expenses for tuition, fees and course materials. The credit can be taken for the first four years of college. After 2010, the credit becomes $1,800. The Hope credit cannot be combined with the Lifetime Learning Credit for the same student during the same tax year.
Lifetime Learning Credit
With the Lifetime Learning Credit, taxpayers can receive up to a $2,000 tax credit for qualifying tuition expenses. Any higher education course qualifies for the credit including graduate courses and degrees. Continuing education students can also qualify for the credit.
Student Loan Interest Deduction
Each year, taxpayers can deduct up to $2,500 in student loan interest paid on qualified education loans. Interest paid on both federal and private loans is eligible. You can take this deduction even if you do not itemize, as it is an above-the-line exclusion from income. You should receive a 1098-E tax form annually from lenders which shows how much interest you paid over the last year.
Consult with a tax professional for more information and see if you qualify for any of these tax breaks. If you do, you’re on your way to shedding thousands off your tax return!