Now that school has begun across the country, I would like to share with you four different tax breaks related to school.
1). The Student Loan Interest Deduction-This deduction allows taxpayers who qualify to deduct up to $2,500.00 of interest paid on a qualified student loan to attend an Accredited College or University. In order to deduct the interest, the loan must have been made for the taxpayer, taxpayer’s spouse, or the taxpayer’s dependent when the loan was obtained.
2). The Lifetime Learning Credit.- This is a credit of up to $2,000.00 each year for the total tuition and expenses during the tax year for all students enrolled in a qualified higher education institution. This credit is not based on the student’s amount of course load, nor is it limited to the first four years of post high school education. In fact, expenses for graduate work are eligible for the lifetime earning credit.
3). Employee Business Expense.-Any taxpayer who takes courses to improve their job performance or to satisfy continuing education requirements may deduct the cost of their tuition and fees, books, and so forth. They also deduct the mileage from your job to the school. Remember, the expenses are only deductible if the course is job related, and would help you obtain a job in a new field.
4). The American Opportunity Credit. –This is a credit of up to $2,500.00 for tuition and related expenses paid for each eligible student. This credit expires at the end of this year. The credit can only be claimed for the first four years of college for each student enrolled at least half time in an accredited program. The expenses that you can deduct are tuition, fees, cost of books and software. This credit is unusual because 40% of it is refundable, which means that even if you have no tax liability, you can receive a tax refund based on this credit.