Being a college student is an expensive job. Throughout the year, hopefully you are keeping in mind ways to save money in college [1] and how to avoid student loan debt [2]. You can get creative to save money on food in college [3], apply for scholarships, and save money on textbooks that can become quite pricey.
But one very important time for every college student’s finances is tax time. While college is a costly venture, you can actually get a lot of breaks around tax time for being a college student [4]. The U.S. Government Accountability Office estimates that more than $800 million worth of college tuition tax benefits go unclaimed every year.
If you are a parent, college tax credits are one of the top 10 ways to lower your taxes with kids [5].
Here are some questions you might have about claiming these benefits and the answers to point you in the right direction:
Are You Eligible for College Tax Credits?
- You are eligible for tuition deductions or tuition tax credits [6] if you, your spouse, or a dependent you claim is a student at an eligible education institution. Your college should be able to tell you if they are an “eligible education institution.†Most colleges, universities, vocational schools, or other postsecondary education institutions are eligible. Simply contact your college’s administrative office if you are unsure if they are an accredited school.
- However, if you are married and filing separately [7], you can’t any claim any of these deductions.
- If your parent or someone else is claiming you as a dependent [8], you are also not eligible for these deductions either. If you are a young college student, check with your parents to see if they are claiming you. For more see When Do Dependents Have to File Taxes? [9]
Tax Credits for College Students
There are two main credits you can claim as a student. You can only choose one of these credits and cannot claim both. Use Form 8863 [10] to claim either of the education tax credits.
- American Opportunity Credit
The American Opportunity Credit [11] allows you to claim up to $2,500 the first four years you are in college. So this means if you’re in graduate school or anything after those four years, this credit is not for you. So what are you claiming for that $2,500? You can claim tuition, course fees, and books and supplies you were required to purchase through your college. If you are filing jointly, you and your spouse will need to learn less than $160,000 to claim the entire credit. ($180,000 for partial credit). If you’re single, you’ll need to make less than $80,000 ($90,000 for partial credit). $1,000 is a refundable tax credit [12] on your tax return if you don’t owe any tax. If you and your spouse are both working on your first four years of college, you can both qualify for this credit. - Lifetime Learning Credit
Unlike the American Opportunity Credit, this credit is for any stage of your education. So if you are working on an advanced degree, like a Masters or Doctorate, you can still claim the lifetime learning credit [10]. You can claim 20% on up to $10,000 ($2,000 maximum credit) of college related expenses, such as tuition, books required by the school that you purchased at your school, and any course fees that you were charged throughout the year. This credit is available for couples who have a MAGI [13] less than $128,000 and if you’re single, you must earn less than $64,000 per year.
Tax Deductions for College Students
There are other tax deductions you should keep in mind if you are a college student while filing your taxes. Here are a few things to keep in mind:
- Student loan interest deduction.
While in many cases, you do not have to make student loan payments while you are currently a student, you may have opted to pay interest while you were still in college. If so, you can deduct this. This is also something to keep in mind if you have already graduated or have stopped taking classes and have already begun paying back your student loans. You may receive Form 1098 from your loan provider. This contains the amount of interest your lender received from you in the year you are filing taxes for. If you have not received this, you can try logging onto your account online. Your loan provider may have included a link so you can access this form online and print off for your convenience. This is also something you can watch for in the mail as they may have also sent it out to you. If you don’t see it online or unsure if you even paid this interest, you can call your lender directly and someone can help you see if this is something you may be eligible to deduct. - Tuition and fees deduction.
If you were enrolled in an accredited college the year you are filing taxes for, you may be eligible to deduct some of your higher education expenses. Use form 8917 for Tuition and Fees Tax Deduction [14]. Keep in mind you must decide between the tuition deduction and the tax credits above; you cannot claim both. To help you decide which one is better see Tuition Deduction Versus Tuition Tax Credits [6].Some of these expenses include your tuition that you paid out of your own pocket or took out loans for, any fees associated with your course enrollment, and books that you are required to purchase through the school. Buying books that your professor asks you to purchase does not count as required books and cannot be factored into the amount you can deduct.
You cannot deduct any student health insurance [15] you purchased, the cost of your room and board if you are living in a dorm or campus apartment, your transportation to and from your college, or any other supplies you were not required to buy directly from you school. For example, while you may have needed a computer to do your research on or a particular study guide to help you, these do not qualify for a deduction.
Keep in mind that you will need to subtract the amount of any scholarships, grants, education assistance, and tuition reimbursement you received from the total cost of your tuition.
Sometimes there is a delay [16] in your tax refunds [17] when you claim a college tax credit. This is usually because the IRS is verifying the attendance at an accredited school.
What are your best tax tips for college students? Have you ever qualified for these credits on your taxes?
More Tax Topics for College Students
- What Do the 2018 Tax Rates Look Like? [18]
- Do Your Kids Need to File Taxes? [19]
- How Much Money Do You Have to Make to File Taxes? [20]
- Tax Calculator to Project Your Tax Refund [21]
- 8917 Form for Tuition and Fees Tax Deduction [14]
- Tax Breaks for College Students [4]
- Form 8863 for Education Credits [10]
- Studying Abroad Advantages and Disadvantages: Is it Worth the Cost? [22]
- Tuition Deduction Versus Tuition Tax Credits [6]