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Video: Top College Tax Deductions and Credits

Updated for Tax Year 2020


OVERVIEW

Watch this video to learn about the top college tax deductions and credits for students and parents. These are six of the most common deductions and credits that eligible students and their parents can use to increase tax savings at the end of the year.


 

The federal tax filing deadline for individuals has been extended to May 17, 2021. Quarterly estimated tax payments are still due on April 15, 2021. For additional questions and the latest information on the tax deadline change, visit our “IRS Announced Federal Tax Filing and Payment Deadline Extension” blog post.

For information on the third coronavirus relief package, please visit our “American Rescue Plan: What Does it Mean for You and a Third Stimulus Check” blog post.

 

Video transcript:

Hello, I’m Adrienne from TurboTax with our top college tax deductions and credits.

Tip #1: See if you can take advantage of The American Opportunity Tax Credit (AOC), worth up to $2,500 each year for students in their first four years of college. As a student, you must be enrolled at least half-time for at least one semester, and working towards a degree during the year that you are claiming the credit.

Tip #2: The Lifetime Learning Credit is worth up to $2,000. It’s available to students in any qualifying postsecondary educational institution.

Tip #3: State-sponsored 529 savings plans give anyone a way to save money for college without paying taxes on the interest earned. You can set up a 529 plan for anyone.

Tip #4: Tax-Free Savings Bonds. If you redeem a Series EE or I Bond to pay for college expenses, you may not have to pay taxes on the earned interest. This is a tax break for parents only. Eligible expenses include tuition and school fees.

Tip #5: The Coverdell Education Savings Account. It works like a five-twenty-nine plan, offering tax-free investment growth and withdrawals when the funds are spent on qualified education expenses.

Tip #6: The Student-Loan Tax Deduction. In 2020, you can deduct up to $2,500 in student loan interest.

Like all of the credits and deductions listed, eligibility differs for people with higher incomes.

For more tips and information that can help you get your taxes done smarter, visit TurboTax.com.

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