Hope and Lifetime Learning Tax Credits
Independent students and parents of dependent students may be able to claim a Hope tax credit of up to $1,800 per tax year for qualified educational expenses for each eligible student during the first two years of postsecondary education. A student must be enrolled at least half time in a degree program or pursuing a recognized education credential.
Independent students and parents of dependent students may be able to claim a Lifetime Learning tax credit of up to $2,000 per return for qualified educational expenses for an unlimited number of years of postsecondary education or for coursework to obtain or improve job skills. The qualifying student does not have to be enrolled in a degree or credential program and individual courses qualify.
Tuition and Fee Deduction
Independent students and parents of dependent students may be able to deduct up to $4,000 in qualified tuition and fee charges from their taxable income in each tax year.
Student Loan Interest Deduction
Independent students and parents of dependent students may also be able to deduct up to $2,500 in interest they paid on student education loans for themselves, a spouse, or a dependent.
Coverdell Education Savings Account (ESA)
Distributions from a Coverdell ESA that cover only qualified education expenses are not taxed. Total contributions to all Coverdell ESAs cannot exceed $2,000 per year per recipient.
Qualified Tuition Program (QTP) or 529 Plans
These programs allow a parent to pre-pay a student's qualified education expenses. Payments to a QTP are not deductible for tax purposes but there is no tax on a distribution from a QTP as long as the amount does not exceed the student's qualified education expenses.
Education Savings Bond Program
Interest earned on qualifying U.S. savings bonds (series EE or series I) may not be taxable if it is used to pay qualified education expenses.
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