7 Tax Deductions and Credits for College Students to Save Money

What is a Tax Deduction vs. a Tax Credit?

Tax deductions work to reduce your taxable income. Tax credits work to reduce your tax liability dollar-for-dollar.

Retirement Account Contributions (IRA)

The tax code awards this behavior by offering you the ability to deduct your contributions from your taxable income if you make them into a traditional IRA.

Capital Gain Losses

If you trade stocks in a taxable account, you hopefully only make gains. But, we live in a realistic world. Not all of our investments will turn out to be winners.

If you pay your own way for college, including tuition, fees, and other qualified higher education expenses, you may have the ability to claim the (AOTC) to lower your tax bill

American Opportunity Tax Credit

Lifetime Learning  Credit

The Lifetime Learning Credit can help pay for undergraduate, graduate, or professional degree courses.

Recovery Rebate Tax Credit

If you aren’t claimed as a dependent on someone’s tax return in 2020, and you didn’t receive a check, you could claim the Recovery Rebate Tax Credit on your return.

Student Loan Interest Deduction

If you’re one of 42 million Americans with outstanding student loans, you can deduct the interest paid as part of your student loan payments.

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