For those parents who feel that children are a blessing, here is yet another reason to see them as so. Parents who pay their child’s college tuition will be happy to know that thanks to Uncle Sam, they can receive education credits and tax deductions on tuition and fees, room and board, books, supplies, student loan interest payments, qualified student loan payments, and more, for a qualifying child enrolled in college.
Students who are:
Adults who are:
Student Loan Interest Deduction
Up to $2,500 of your student loan interest can be deducted on your taxes as long as: (1) the individual’s adjusted gross income isn’t more than $75,000 for a single person and no more than $150,000 if they are married, (2) their filing status is not “married filing separately, and (3) they can’t be claimed as a dependent on their parents taxes.
Lifetime Learning Credit
Parents may be eligible to claim up to $2,000 of the lifetime learning credit for qualified students enrolled in an eligible institution as long as; (1) they pay qualified education expenses for higher education, (2) the eligible student is yourself, your spouse, or a dependent the parent claims an exemption for on their taxes, and (3) parents pay education expenses for an eligible student.
American Opportunity Credit
If parents pay eligible college expenses for themselves or a qualified student, and they are single with an AGI less than $80,000, less than $160,000 for married couples, they may be eligible for a maximum annual credit of up to $2,500 per student.
How to File
Even if the parent or the parent’s child/children meet the requirements for both the Lifetime Learning Credit and the American Opportunity Credit, they can only receive one of them for each student in the same year. Parents can, however, spread the credits amongst qualifying students and alternate between them each year. According to the IRS, when doing your taxes, individuals should compare the tuition fee deductions they or their children qualify for to see which gives the biggest break then claim that credit on their tax return.