As people try to reinvent their careers, many are finding that they need more education in order to obtain their goals. Attending college can be expensive and yet important investment. The good news is that there are some tax breaks available to those who take the time to look for them. The following are some important tax breaks that every prospective and current college student should know according to the Wallstreet Journal’s Back to School article:
- American Opportunity Tax Credit – $2500/year offset to taxes with possible $1000 refund
- Lifetime Learning Credit – $2000/year possible offset
- Student-Loan Interest Deduction – $2500 interest deduction per year
- 529 Plans – Earnings aren’t taxed
- IRAs – Taxed earnings but no 10% early withdrawal penalty
- Employer Assistance – Employers can pay up to $5250 not taxed
- Work-Related Education Deductions – Multiple expenses eligible for deductions
- Scholarships and Grants – Usually tax-free
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