Are you or your child going to college this fall? Don’t forget about tax credits!

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If you or another in your household is going off to school this fall, you may be in for a treat come tax time next year. There are multiple tax credits and deductions available for college tuition, fees, and supplies. Currently, the favorite credit by most is the American Opportunity Credit, which allow for a $2500 credit against tax (partially refundable even!), for up to $4,000 in tuition. If you do not qualify for the American Opportunity Credit, there is the Lifetime Learning credit and the Tuition and Fees deduction that are also available.  There are different rules for each, and different income limitations as well. which could reduce or eliminate any potential benefit seen from these credits. For your tuition, you will receive a 1098-T from the school in January. More often than not, the schools are making this available electronically to the student, so if you did not receive a copy in the mail, the student will need to check their online account.

It is also possible to utilize a 529 plan alongside the credits available. You cannot double dip by claiming the credit on tuition paid for by using the 529 funds, but you can pay for lodging from the 529 plan, and take the tuition for the credit, for example.

Even after college, you can still benefit! The student loan interest is another deduction available. This deduction does have income limitation thresholds as well, but it is not so low that you will be excluded. Each year you will receive a 1098-E reporting the interest paid on your loans. Be sure to provide this to your tax accountant so you don’t lose out on this deduction!