Tax Deductions And Credits For College Students To Save Money

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

1. Retirement Account Contributions (IRA) Before picking a stock trading app to invest this money, make sure you do your stock market research first.

2. 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.

3. American Opportunity Tax Credit This credit can be worth up to $2,500 per year for four years of schooling after high school if enrolled at least half-time and working towards a degree

4. Lifetime Learning Credit Closely related to the American Opportunity tax credit, this one also lowers your tax bill on a dollar-for-dollar basis, but only one can be claimed.

5. Recovery Rebate Tax Credit People received these payments last year as an advance payment, but technically it counts as a tax credit on your 2020 return.

6. 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.

7. Earned Income Tax Credit If you attend college as an older student and earn a low-to-moderate income, you may also qualify for the earned income tax credit.

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