Use Tax Breaks to Cut Education Costs
Wednesday, September 7th, 2011
As schools get back in session, it is a good time to check the education tax breaks for which you might qualify.
First, there’s the American Opportunity Tax Credit (formerly called the Hope credit) for a percentage of qualified expenses paid during the first four years of higher education.
Second, the Lifetime Learning Credit allows a deduction for a percentage of qualified expenses paid for any year the American Opportunity Credit isn’t claimed, and it even applies to job-related classes.
Third, you may qualify for a deduction for interest paid on student loans.
Fourth, education savings accounts allow annual nondeductible contributions for children under 18, with tax-free withdrawals for qualifying education expenses. Section 529 plans for college expenses should also be investigated.
As always, please contact our office to discuss if these are appropriate for you.