How College Students and Parents Can Maximize Education Tax Benefits

Education expenses can be a significant burden, but the IRS offers several tax breaks that can help ease the cost of college. Here's what students and parents should know:

1. American Opportunity Tax Credit (AOTC)

• Up to $2,500 per student (first 4 years of college)

• 100% of the first $2,000 in expenses, 25% of the next $2,000

• Up to 40% refundable (you may get money back even if you owe $0)

• Income limits apply ($80K single / $160K married phaseout)

2. Lifetime Learning Credit (LLC)

• Worth up to $2,000 per tax return

• Available for any year of postsecondary education (college, grad school, even continuing ed)

• Nonrefundable, income limits slightly lower than AOTC

3. Student Loan Interest Deduction

• Deduct up to $2,500 in interest paid on qualified student loans

• Above-the-line deduction — no need to itemize

4. Tips to Maximize Savings

• Coordinate timing of payments (some families can double up payments at year-end)

• Avoid claiming the same expense twice for different credits

• Parents claim the student if they’re a dependent to use the credits

📌 Need help planning education expenses? We can help you choose the best strategy based on your income and goals.