2020 tax deductions and credits

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Tax credits and tax deductions for students can help offset tuition fees or pay off a loan.

Credits and deductions can help you pay less income tax by reducing your tax bill dollar for dollar or reducing your taxable income.

If you have paid the tuition fees, you can use these tax breaks for yourself if you are currently a student, or for your spouse or dependent child if they are in school. College students can only claim one tax credit per year, but parents with more than one child in college can claim tax credits, in some cases, per student.

American opportunity credit

With the American opportunity tax credit (AOTC), taxpayers can claim a credit of up to $ 2,500 for the first four years of post-secondary education for tuition, books, supplies and equipment related to courses.

The amount of the credit is 100% of the first $ 2,000 of eligible education costs and 25% of the next $ 2,000. It can be claimed for each student in the family.

The following Adjusted Gross Income (AGI) limits apply:

Since 40% of the credit is refundable, filers can get up to $ 1,000 of the credit as a refund if the credit reduces their bill to $ 0 and even if they had no income.

Credit is not available to taxpayers who are married but who file separately.

Lifetime learning credit

The tax credit for continuing education (LLC) allows students in undergraduate, graduate and professional degree programs to claim a refundable tax credit for education-related expenses. You can deduct 20% of the first $ 10,000 of eligible education expenses, making the maximum credit of $ 2,000.

The following AGI limits apply:

Although the IRS does not allow taxpayers to claim both the LLC and the AOTC for the same person in the same year, both can be claimed on a single tax return when two students individually qualify.

Credit is not available to taxpayers who are married but who file separately.

Deduction of interest on student loans

Borrowers who have taken out a federal or private student loan can deduct up to $ 2,500 of interest paid on the loan as a deduction from their gross income, provided they are not dependent on another tax return. person and that the loan covered qualifies as education expenditure.

The following modified adjusted gross income (MAGI) limits apply:

Modified adjusted gross income is usually your AGI before by taking advantage of the interest deduction on student loans.

Deduction of tuition and fees

The tuition and fee deduction has been renewed for the 2019 and 2020 tax years in a last-minute government spending bill.

Students who paid tuition, books, supplies, or equipment for a degree program in which they, their spouse, or their dependent were enrolled in 2020 may be eligible for a reduction of their taxable income of up to $ 4,000.

The deduction is gross income, which means it does not require detail. However, taxpayers cannot claim this deduction in addition to federal education tax credits.

Taxpayers earning more than $ 80,000 as single tax filers or $ 160,000 as married spousal filers are not eligible for the deduction. Married couples who file separately are also ineligible.


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