In order to ease the burden of students in this time of costly textbooks and record-high tuition bills, the federal government has provided several sizable tax credits. You may be able to save a couple thousand dollars this year, just by proving you’re a student in an eligible college or university.
If you are attending an accredited university, your school will send you a 1098-T form at the beginning of each year. This record includes important tax information about your education-related expenses that the school is required to send to both the student and the IRS. Some of the information recorded includes: amounts billed for tuition and other expenses, payments received, student status, and scholarships awarded. Once you receive this information, you will be able to file for tax deductions that could save you up to $2,000, a sizable sum for most students. Take a look at the following tax credits to see how you can save:
The Lifetime Learning Tax Credit is available to students who take at least one class from an accredited school, including both graduate and undergraduate institutions. Qualifying students can get credit for 20% of the first $10,000 they spend on educational expenses, with a maximum credit of $2,000. In order to be eligible, single filers must have an adjusted gross income of less than $52,000 and joint filers must make less than $105,000.
The Hope Scholarship Tax Credit is offered to students who are enrolled in college at least half-time and are working on their first two years of undergraduate study (freshmen and sophomores). Filers who meet the income cap requirements (the same income requirements as the Lifetime Credit) may be eligible to receive 100% of their first $1,000 and 50% of their next $1,000, with a maximum credit of $1,500. Students who file for this credit must be free of any felony convictions involving the possession or distribution of controlled substances.
Students who do not meet the income cap requirements for the previous credits may qualify for the Higher Education Tuition and Fees Deduction. Singles with adjusted gross incomes between $65,000 and $80,000 or families who make between $130,000 and $160,000 may be eligible for a $2,000 deduction.
For more information on tax breaks for students, take a look at the IRS website and the Tax Credit Reporting Service site. Each offers a wealth of information as well as downloadable forms and useful FAQs.