For many students and their parents, tax season is a time of grumbling and groaning. Forms, paperwork, and the April 15 tax filing deadline can add stress to an already hectic life. But if you're paying off student loans or paying for college tuition and fees, your higher education investment might help you in a way you didn't expect — by reducing your tax bill.
The higher education related tax benefits that students and parents may be able to take advantage of include but are not limited to:
- The student loan interest deduction, which can reduce the taxable income of many student and parent loan borrowers based on the amount of interest paid by the borrower or on the borrower's behalf over the tax year.
- The tuition and fees deduction, which can reduce the taxable income of taxpayers based on college tuition and fees paid during the tax year.
- The American Opportunity and Lifetime Learning tax credits, which allow many taxpayers to claim a credit against their federal income taxes for college tuition and fees paid during the tax year.
Where can I get more information?
Publication 970, published by the IRS, along with the instruction booklets for Form 1040 and Form 1040A, include instructions on how the various tax benefits should be applied to an individual tax return. These publications and other useful information can be obtained at the IRS website, located at www.irs.gov. The IRS also offers taxpayers free answers to tax questions at 1-800-TAX-1040 (829-1040).