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Education-Related Tax Benefits


Over the past decade, higher education has become more and more expensive, making it especially important for parents and students to take advantage of available education-related tax benefits. If you or your child are thinking about applying for college, you should consider speaking with an experienced tax attorney who can help you apply for applicable benefits and tax credits.

College Tax Credits 

There are two main college tax credits that students may qualify for: the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). The AOTC is a tax credit available to students or their parents, spouses, or dependents and applies to education-related expenses for the first four years of higher education, including tuition, enrollment costs, and course materials. Those who are eligible can receive a credit of up to $2,500 per student. In fact, if the credit brings the amount that a taxpayer owes to zero, he or she can receive a refund of as much as 40 percent of the remaining credit. Taxpayers are also allowed to claim this credit for a student enrolled in the first months of January of next year, as long as expenses were paid in 2017.

The Lifetime Learning Credit has a maximum benefit of $2,000 and applies to both graduate and undergraduate students for tuition and enrollment fees, but does not cover books and course materials. Unlike the AOTC, this benefit is available for an unlimited number of tax years, although the limit on the benefit will be applied to each tax return and not to each student.

Additional Benefits  

Aside from tax credits, there are a number of education-related tax benefits that are designed to assist parents and students pay for higher education. For example, scholarship and fellowship grants are not taxed if they are used to pay for tuition, books, and enrollment fees. Taxpayers can also make use of an interest deduction of up to $2,500 every year on qualifying student loans if the funds are used for tuition, fees, room and board, books, and other course materials. Earnings contributed to a Qualified Tuition Program, which are more commonly known as 529 Plans and act as college savings accounts operated by a state or educational institution, are not subject to federal tax, although contributions are not deductible.

Finally, employees who are enrolled in work-related education are permitted to claim a deduction for expenses, such as tuition, fees, and course materials or equipment. This helps reduce the amount of a person’s income that is subject to taxes and could result in significant savings. Before a taxpayer can take advantage of this benefit, he or she must be working, itemize applicable deductions, and if self-employed, file the appropriate paperwork.

Call Today to Schedule a Consultation with an Experienced Orlando Tax Attorney  

To speak with a tax attorney about the best way to save money on your child’s education, please contact dedicated Florida tax lawyer Ronald Cutler, P.A. at 386-490-9949 today. A member of our legal team is standing by to give your case the one-on-one attention it deserves.