Mon. Jul 4th, 2022

Given the high cost of higher education these days, students have to be as informed as possible about the various ways to pay for their college degrees. Taking advantage of the tax benefits for education is one great way students can lessen that financial burden.

These tax benefits fall into one of two categories – tax credits or tax deductions. Tax credits reduce the amount of income tax you have to pay on a dollar by dollar basis. On the other hand, tax deductions reduce the amount of income that is subject to tax.

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Here are a few examples tax benefits for education:

1. The American Opportunity Credit.

The maximum credit per student is $2500

2. Business Deduction For Work Related Education.

If you travel to a from to college by car, you may use the transportation cost and claim a business deduction for work related education. You’ll need to be doing a course that is deemed mandatory by your employer or by law in order for you to maintain your current salary and status.

As of writing this article, students may claim a tax deduction of 55 cents per mile

3. Student Loan Interest Deduction

If you, your spouse or dependent have taken out a student loan to enroll in a college degree program at least half time, you might be eligible to use the interest on the loan to claim a tax deduction. You can reduce your income that is taxable by up to $2500.

There are other tax benefits for education as well as other great ways to lessen the financial burden of paying for your university degree. Make sure you read up on these.

By rahul