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 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 interest tax deduction. 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.
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