There are many deductions and credits available for college students and their parents. These education benefits cannot be combined for the same student, so taxpayers should choose the one that is most beneficial. Also, with today’s average college graduate having more than $25,000 in student loan debt, they should remember to deduct student loan interest.
- American Opportunity Credit was extended through 2012. Allows eligible taxpayers to claim up to $2,500 for each of the first four years of college for each student.
- Tuition and Fees deduction provides a reduction in taxable income up to $4,000.
- Lifetime Learning Credit is worth up to $2,000 per return for qualified higher education expenses.