As the cost of higher education continues to rise, students across the country search for new ways to pay for their education. However, one aspect they might not have taken under consideration is the tax benefits for education. In fact, students can greatly lesson the financial burden of higher education by looking into the tax benefits for college.
When it comes to tax benefits for higher education, there are two categories: tax deductions, and tax credits. Tax reductions reduce the income amount that is subject to tax, while tax credits reduce the amount of income tax the student has to pay based on the dollar. For example, the American Opportunity Credit provides up to $2500 credit per student.
The Business Deduction for Work Related Education is another option. This example helps students that travel to college by car. As long as the class is mandatory by your employer or by law, the student can claim a business deduction for work related education.
Finally, students can also look into the Student Loan Interest Deduction. Students, or spouses that have taken out a student loan for college at least half time, might have the opportunity to claim a tax deduction on the interest on the loan. The amount is taxable by up to $2500. These are just some of the tax benefits of higher education.