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Income Tax Tips for College Students

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There's a good chance that if you're a parent of a college student you are constantly looking for ways to save money. However, many students and parents are unaware that there are federal tax credits and deductions that can make college more affordable.

According to the New York Times, "Families spend an average of $24,000 a year on college." However, according to Sallie Mae's research, "only 1/3 of students actually take advantage of the tax benefit opportunities to save money."

Here's how it works, credits reduce the tax owed, while deductions reduce the amount of income on which the tax is calculated. If taken advantage of, you are guaranteed to lower the cost of education, however, you can only take one or the other per year.

American Opportunity Tax Credit

For the first four years of education, qualifiers are able to reduce their tax bills by as much as $2,500. "Even if you owe no taxes, you can get up to $1,000 back as a refund," according to tax analyst, Michael Sonnenblick. In order to receive the credit, potential qualifiers must obtain the following:

Single Tax Payer:

• Full Credit - income up to $80,000

• Partial Credit - income up to $90,000

Married Tax Payer:

• Full Credit - income up to $160,000

• Partial Credit - income up to $180,000

Lifetime Learning Credit

Compared to American Opportunity Tax Credit, Lifetime Learning Credit offers a credit per taxpayer return of $2,000 rather than on a student basis. Also, the Lifetime Learning Credits isn't refundable.

Single Tax Payer:

• Full Credit - income up to $55,000

• Partial Credit - income up to $65,000

Married Tax Payer:

• Full Credit - income up to $110,000

• Partial Credit - income up to $130,000


We at Timothy J. Sierra Attorney at Law would like to state that our blog posts and links, on our web page or any other social media outlet, to any other web pages are not intended for legal advice. We are not responsible for third party website information. If one is in need of legal advice please contact an attorney directly.

Source: Tampa Bay Times | Taxes

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