Taxes 2021: Credits, deductions, and tax breaks for student loans and college costs
Grants, scholarships and financial aid are all useful for handling the very real costs of a college education, but don’t sleep on tax credits and deductions. Both college students and parents of college students can take advantage of tax breaks that can mean thousands of dollars of savings on tuition, fees, books, and supplies.
Here are some of the best college-related tax credits, deductions and other tax breaks that you may be able to take.
American Opportunity Tax Credit
The American Opportunity Tax Credit allows you to lower your income tax bill by up to $2,500 per student, per year on undergraduate tuition, fees and books. Room and board, though, don’t count.
But you can only claim this tax credit for four years, said Meagan Landress, a student loan consultant for Student Loan Planner. To claim the credit, fill out IRS Form 8863 with your tax return.
Who qualifies: Undergraduate college students who file their own tax returns or parents who pay the college tuition costs for children listed as dependents on their tax return qualify for the credit. (más…)