4 tax breaks every U.S. college student should know about

  • If you attended undergraduate, graduate, and professional school this year, you may be eligible for a tax break.
  • The IRS offers tax deductions and tax credits for college students that either reduce taxable income or lower your tax bill.
  • The American Opportunity Credit allows students earning less than $80,000 to claim up to $2,500 for the first four years of college for tuition and fees, course-related books, supplies, and equipment.

If you attended undergraduate, graduate, and professional school this year, you may be eligible for a tax break.

Tax credits and tax deductions can help you pay less income tax, according to the IRS. Tax credits are subtracted directly from the amount you owe in taxes on a dollar-for-dollar basis, while tax deductions reduce your taxable income.

There are a few tax deductions and tax credits available for students that may help offset the cost of tuition of other school-related expenses.

You can use these credits and deductions for yourself, if you're currently a student, or for your spouse or a dependent child if they are the one in school. College students can only claim one tax credit a year, but parents supporting more than one child in college can claim tax credits on a per-student basis. 

4 PHOTOS
4 tax breaks every U.S. college student should know about
See Gallery
4 tax breaks every U.S. college student should know about

American Opportunity Credit

With the American Opportunity Tax Credit students are eligible to claim a credit of up to $2,500 for the first four years of post-secondary education for tuition and fees, course-related books, supplies, and equipment. Couples filing jointly whose adjusted gross income (AGI) is less than $160,000 and single-filers whose AGI is less than $80,000 are eligible.

And since 40% of the credit is refundable, that means students can get back up to $1,000 on their refund — even if they don't owe any taxes, according to the IRS. 

Lifetime Learning Credit

The Lifetime Learning Tax Credit allows students earning less than $66,000 (single-filers) or $132,000 (married, filing jointly) to claim up to $2,000 for education-related expenses.

Tuition and fees deductions

Like the American Opportunity Credit, students earning less than $80,000 (single) or $160,000 (married, filing jointly) can deduct up to $4,000 in tuition and fees on their annual tax returns. 

Student-loan interest deduction

If you've taken out a federal or private student loan, you're eligible to deduct up to $2,500 worth of interest paid on the loan as an "above-the-line" exclusion from your income. You don't have to itemize your deductions in order to claim it. Students with a modified adjusted gross income (MAGI) less than $80,000, or $160,000 if filing jointly, are eligible.

HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE

More from Business Insider:

Driving for Lyft? Use This Tax Preparation Checklist

So, you decided to become your own boss (at least part-time) and start driving for a ride-sharing company like Lyft. Use the Lyft tax preparation checklist below to organize your income and deductions to make filing your taxes a breeze. Remember, not all items listed will apply to you, but it will give you a good idea on what you need to report as income and what you can claim as a deduction.

Read More

Brought to you by TurboTax.com

Video: The Alternative Minimum Tax (AMT) Explained

Originally created to make sure the wealthy paid taxes even after using tax breaks and loopholes, the Alternative Minimum Tax (AMT) has never been updated and continues to impact middle class Americans more and more each year as a result of inflation. To compensate for inflation, the AMT now includes an exemption amount. This exemption is indexed for inflation so it changes every year.

Read More

Brought to you by TurboTax.com

Energy Tax Credit: Which Home Improvements Qualify?

Taxpayers who upgrade their homes to make use of renewable energy may be eligible for a tax credit to offset some of the costs. As of the 2018 tax year, the federal government offers the Nonbusiness Energy Property Credit. The credits are good through 2019 and then are reduced each year through the end of 2021. Claim the credits by filing Form 5695 with your tax return.

Read More

Brought to you by TurboTax.com

Top 5 Reasons to File Your Taxes Early

Every April, many taxpayers wait until the last minute to file their federal income tax returns. Despite this tendency, there are many reasons to file your taxes early. If you will receive a refund, you may want to submit your return as quickly as possible. Additionally, there are benefits to filing early for those taxpayers who have a balance due.

Read More

Brought to you by TurboTax.com
Read Full Story
Your resource on tax filing
Tax season is here! Check out the Tax Center on AOL Finance for all the tips and tools you need to maximize your return.