Any money students or parents can save on taxes or college is a big plus. Fortunately, the U.S. government offers several tax benefits for higher education. Consult with a tax advisor or an accountant to see if you’re eligible for these credits or deductions and to find out how to claim them. Here are some things to consider:
Are these tax benefits being claimed by parents or students?
Either parents or students (not both) may claim tax benefits.
What kinds of educational tax breaks are there?
There are two common types of college tax benefits:
Note: The IRS states that you may be restricted to claiming only one educational tax benefit per tax year- “no double benefit allowed.”1 For more information, please see IRS Publication 970 or go to the IRS website.
American Opportunity Tax Credit (AOTC)2
The AOTC reduces the amount of tax you pay by giving you a credit for qualified education expenses such as tuition and course materials for the first four years of college. The AOTC:
Lifetime Learning Credit3
Like the AOTC, the Lifetime Learning Credit reduces the amount of tax you pay by giving you a credit for qualified education expenses, but it has different requirements and provisions. The Lifetime Learning Credit:
The American Opportunity Tax Credit and Lifetime Learning Credit are just two of the most popular tax benefits. You may also wish to take advantage of the following:
Student Loan Interest Deduction
Scholarships, fellowships and grants reductions (awards like these may count as income and could be taxable unless tax benefits are requested)
The U.S. government gives a variety of tax breaks to parents and students who save for a higher education). Some of the most common tax-advantaged programs include:
Remember, if you don’t take advantage of the tax benefits that are available, you’re just leaving money on the table!
This content does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. View and compare the available features of SunTrust private student loans.
Union Federal is a federally registered trademark of Cognition Financial Corporation used by SunTrust Bank under license. The Union Federal Private Student Loan is funded by SunTrust Bank and is not offered in connection with any other lender or the federal government. Cognition Financial Corporation is not an affiliate of SunTrust Bank.
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1 Source: Department of the Treasury Internal Revenue Service: Publication 970, Tax Benefits for Education for use in preparing 2017 Returns.
2 Source: Department of the Treasury Internal Revenue Service: American Opportunity Tax Credit.
3 Source: Department of the Treasury Internal Revenue Service: Lifetime Learning Credit.
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