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A Look at Federal Tax Benefits For Education

If you, your spouse, or your children or dependents attended college last year, the money you spent on tuition, fees, and in some cases even books and course material, can count towards one of two educational tax credits or deductions.

Educational Tax Credits and Deductions:

  • The two educational tax credits an in-depth comparison of the American Opportunity Tax Credit and Lifetime Learning Credit.

  • Claiming the education tax credits explain how to claim the two credits when you prepare your return.

  • The tuition and fees tax deduction offers possible tax savings to those who do not qualify for credits.

  • The student loan interest deduction allows you to deduct interest paid in 2017 on qualifying student loans.

A Few Things to Keep in Mind

When looking for tax savings in either education-related credits or deductions, there are a few rules that apply across the board that you should be aware of:

  • You may not claim either of the tax credits or deductions if your tax filing status is married but filing separately.

  • Of the two tax credits, the American Opportunity Tax Credit (or AOTC) is by far the most advantageous one, if you qualify.

  • There is no "doubling of benefits" allowed, meaning that you may not claim more than one credit or the tuition tax deduction for the same student in the same tax year.

  • As with all tax credits and many deductions, limits on income apply.

  • The two educational tax deductions are actually income adjustments which means that you don't have to itemize and can still take the standard deduction.

  • The TurboTax e-filing interview is the easiest and quickest way to figure out if you qualify for any educational tax savings. Best of all, it's free to use until you file.

Related IRS Publications

You can get more information federal tax benefits for education directly from the IRS, in the form of IRS Publication 970 (it's lots of fun.)

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