Two tax credits can help offset the costs (tuition, fees, books, supplies, equipment) of college or career school by reducing the amount of your income tax:
- The American Opportunity Credit allows you to claim up to $2,500 per student per year for the first four years of school as you work toward a degree or similar credential.
- The Lifetime Learning Credit allows you to claim up to $2,000 per year for any college or career school tuition and fees, as well as for books, supplies, and equipment that were required for the course and had to be purchased from the school.
You may also be eligible for a tax deduction once you begin repaying your loans:
- You can take a tax deduction for the interest paid on student loans that were borrowed for yourself, your spouse, or your dependent. This benefit applies to all loans (not just federal student loans) used to pay for higher education expenses. The maximum deduction is $2,500 a year.