Friday, February 18, 2011

5 Tax Benefits For Students

Happy StudentImage by tilitran via Flickr
With college being so expensive you need all the help you can get to save a little money. Our friends over at HRBlock.com have given us 5 tips that apply to the student or the one paying for the students education. 

  • American Opportunity Credit: Up to $2,500 in 2010 for qualified education expenses will be paid to each eligible student who is enrolled part-time or full-time. You can claim the credit only for the first four years of higher education, but it doesn't apply to private secondary school or graduate school. This credit is 40 percent refundable and up to $1,000 may be refunded to the taxpayer even if there is no tax liability.
  • Lifetime Learning Credit: You can receive up to $2,000 for qualified education expenses. You can claim this credit only once per return, but there is no limit on the number of years you can claim the credit. You're eligible for this if you're a student who takes one or more courses. Qualified expenses for the Lifetime Learning Credit include the cost of courses that aren't part of a degree or certificate program. So if you work and take occasional courses to strengthen your job skills, you are eligible for this credit.
  • Tuition and Fees Deduction: You may be eligible for up to 100 percent of qualified higher education expenses with a maximum of either $4,000 or $2,000, depending on the taxpayer's filing status and income level. Like the Lifetime Learning Credit, there is no course load requirement or limit on the number of years the deduction can be taken.
  • Student Loan Interest Deduction: If you are paying back student loans used to pay for higher education, you may be eligible to deduct up to $2,500 per return for every year.
  • Employer-provided Educational Assistance: If you received educational assistance benefits from your employer you can exclude up to $5,250 of those benefits each year.
Our tax returns are becoming more complicated every year. If you have any doubt to your ability to complete them correctly be sure to hire a competent tax preparer. They always seem to find those pesky deductions we miss. They may be able to keep a little more coin in your pocket and less in Uncle Sam's.

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