man using calculator with "tax" written on it next to rolled up wad of cash

Tax Breaks Every Student Should Know

Tax filing season just recently began and although filers have until April 15th, it’s never too early to get started and turn in all your required paperwork. If you’re a student filing taxes, you should know that there are multiple credits and deductions you can take advantage of to save money this season. Here are a few tax breaks every student should know. 

[Read More: How Students Can Save Money at College] 

American Opportunity Tax Credit 

The AOTC is a great opportunity for students to get up to $2,500 annually for up to four years. Even if your liability is low and you don’t owe the IRS, you can still get up to $1,000 in cash as a refund. Complete form 8863 to claim the AOTC. 

Lifetime Learning Credit 

Similar to the LLC, the AOTC is a credit for individuals pursuing higher education. The LLC is worth up to $2,000, but there is no limit to how many years you can claim it and is not refundable. To qualify, you or your dependent must be enrolled at an approved university or college for at least one semester. 

close-up of income tax return form with hundred dollar bills next to it

Student Loan Interest Tax Deduction 

If you’re most students at a four-year college or university, you probably have a student loan of some kind. You can deduct up to $2,500 of the interest you paid the loan over the course of the year with the Student Loan Interest Tax Deduction. This is interest you paid on a loan you took out solely to pay qualified education expenses. 

Tuition and Fees Deduction 

The Tuition and Fees Deduction can deduct up to $4,000 off your tax return, thereby reducing your taxable income. This deduction is eligible for students, spouses of students or if you have a dependent who is a student. Expenses deducted do not include living expenses, however. 

Thanks for reading! To learn more about student tax breaks, visit the IRS website and keep up with our blog for more posts like this.