Education Tax Benefits and Credits
Can I deduct my tuition from my federal taxes?
There are a number of ways the tax code helps people afford college.
The federal government offers federal tax benefits, tax credits, tax deductions and savings incentives that can offset college costs. According to the IRS, here is how each program works:
• A tax credit reduces the amount of income tax you may have to pay.
• A deduction reduces the amount of your income that is subject to tax, thus generally reducing the amount of tax you may have to pay.
• Certain savings plans allow the accumulated interest to grow tax-free until money is taken out (known as a distribution), or allow the distribution to be tax-free, or both.
• An exclusion from income means that you won't have to pay income tax on the benefit you're receiving, but you also won't be able to use that same tax-free benefit for a deduction or credit.
For more information, visit the IRS website at www.irs.gov.
What is the American Opportunity Credit?>