Writing Off Your College Expenses
How Much Does Nursing School Cost?
Do I Need to Have Good Credit to Get Student Loans?
You’re in College and on Your Own; How Do You Create a College Budget?
What is the Public Service Loan Forgiveness Program?
What is the smartest way to get my Student Loan repaid?
Financial Services Offered by Sallie Mae
That Internship that Takes Up All of Your Time is Unpaid, How Do You Survive?
When you are trying to get through school or repay student loans after graduation, the last thing you need is a superfluous expense. And, if you don’t know how to handle student loans on your income taxes, you could be saddled with exactly that. The IRS gives student loan holders several opportunities for tax breaks; you just have to know how to claim them on your tax returns. We will tell you everything you need to know to maximize your tax breaks on student loans in what follows.
Before your repayment period begins on your student loans, you don’t technically need to do anything out of the ordinary on your income tax returns. However, if you meet certain income requirements, you might be able to take a tax credit or make an adjustment to your income for tuition and fees. The income adjustment would reduce the amount of money on which you have to pay taxes and may also place you in a lower tax bracket. With regard to tax credits, you can either qualify for a Hope credit or a Lifetime Learning Credit, both of which are explained below.
A Hope Credit gives you a tax break of $1,650 per eligible student. The Hope Credit is only available until the first two years of post-secondary education are completed and is only available for two years total per eligible student. Here are the qualification requirements for the Hope Credit:
The Lifetime Learning Credit allows a credit of up to $2,000 per income tax return. The credit can be used for all years of the student’s post-secondary education and is available for an unlimited number of years. The felony drug conviction rule does not apply to the Lifetime Learning Credit. To qualify, a student does not have to be pursuing a degree or other education credential. The credit is available for one or more courses.
If your income does not exceed a certain level, you might qualify for the
student loan interest deduction once you begin repayment of your loans. This deduction is claimed as an income adjustment, which means you do not have to itemize deductions to claim it. You can claim up to a $2500 deduction if:
