Student Loan Interest Deduction
If you paid interest on a student loan and your income qualifies, you may be able to deduct up to $2,500 of that interest off your income.
You may be eligible to take the interest deduction if you, your spouse, or a person who was your dependent is a student who was enrolled at least half-time in a program. The student loan must be used for qualified and necessary expenses which include tuition and fees, room and board, books, supplies, equipment, or transportation.
Tuition and Fees Deduction
If you paid tuition and fees to an eligible school, and your income qualifies, you may be able to deduct up to $4,000 off your income to help lower your taxes.
If you were responsible for paying the college expenses for yourself, your spouse, or your dependent at an eligible college, university or vocational school, (contact the school to see if it’s eligible), then you may qualify for this deduction. For most students, this deduction covers education expenses such as tuition, course-related books, supplies, and student-activity fees, but does not include personal, living, or family expenses, such as room and board. However students in Midwestern disaster areas can deduct expenses such as room and board.
Editor’s Note: Besides this Tuition and Fees Deduction, the Hope Credit and the Lifetime Learning Credit can also reduce the amount of taxes paid on behalf of students in eligible schools. You can choose whichever one of these credits or deductions will help you more, but you cannot use more than one for the same student in the same year.
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