Deductions every college student should know about during tax season
As a student, you’re required to shell out a lot of money just receive a basic degree, and often full-time students can’t commit to anything more than a part-time job. This makes it difficult to have any extra money to save or even use on day-to-day expenses. Fortunately, there are a few college tax deductions that you can take advantage of.
- College tax deduction #1: Student-loan interest paid by parents – Normally, as Kiplinger.com reports, you can only deduct student-loan interest if you are legally required to repay the debt. But if it is the parents who pay back a student’s student-loan interest, then the IRS acts like the parents gave the student the money and the student paid the debt. Any student, then, who is not claimed as a dependent may be qualified to deduct up to $2,500 of student-loan interest paid by his or her parents. This is definitely a college tax deduction to be aware of!
- College tax deduction #2: American Opportunity Credit – This credit has been extended through 2012 and is available for up to $2,500 of tuition and related expenses from the year. It’s available for individuals whose modified adjusted gross income does not exceed $80,000 ($160,000 for married couples who file jointly). Yet another college tax deduction that will come in handy!
- College tax deduction #3: Tuition fees and deduction – This has only been extended through 2011, but it allows any person who paid tuition and other required fees for attending college, university, or other post-secondary school (including parents of a dependent attending school) to claim up to $4,000/year if your income meets the amount restrictions.
- College tax deduction #4: Midwestern disaster area students – Students who attend school in the Midwestern disaster areas can include books, supplies and room and board as part of their qualifying deductions for the aforementioned American Opportunity Credit and tuition fees deduction.