There’s a nice little list of tax deductions and credits that should be brought to the attention of college students.

Remember, not everyone may qualify for these, but it’s worth looking into. Bring this article to the attention of your parents to see what kind of tax benefits they can receive. And like Eazy-E always said, don’t quote me boy ’cause I ain’t said… (that’s my disclaimer)

Deductions

Student Loan Interest Deduction - You can deduct the interest that you’ve been paying back on your student loan, as long as the loan was used for higher education purposes (i.e., college). If you’re married, no one else can claim you, and you can only file a joint return to take this deduction (so long as you and your spouse are under a certain income amount). If your parents are claiming you on their tax return, they may qualify for this deduction. Check with your accountant, or read more directions.

Tuition and Fees Deduction - In order for someone to claim this deduction, the tuition expenses must have been paid by the person(s) filing the tax return. For example, if your parents claim you but you paid for school, they cannot take the deduction. Textbooks, room and board and any recreational costs (beer) are not deductible. Strictly the cost of what was required for you to attend class, better known as qualified tuition expenses. You cannot take this deduction if you take any of the credits listed below. If you’re married, you can only take this deduction if you file joint. Find out if you qualify.

Credits - (what’s the difference between deductions and credits?)

HOPE Scholarship Credit - Yes, this credit offers exactly it’s name: Hope The maximum credit is up to $1,650 for each of your first two years of college! This is a nice credit. Say you’re folks owe $1,500 on their 2007 tax return, and receive a Hope credit of $1,650. Their tax liability turns into a tax refund of $150. Hmm. You, or your parens, just owed the IRS $1,500… now they’re paying you simply for going to school? Wow. This gets better. Say someone, such as a rich uncle, pays for your college education. For purposes of this credit, the law assumes YOU paid it. Take the credit (pun intended).

Lifetime Learning Credit (LLC) - If you thought $1,650 was a good amount of money, tack on another $350. You can receive a credit of up to 20% of qualified tuition expenses, but the total amount can’t exceed $2,000. Again, this is a huge amount of money that you should definitely look into. There are income limitations for both credits, and other limits that may prevent you from taking these. Dig deeper to see if you qualify.

Credits are always more beneficial than deductions, because they are dollar for dollar. Usually, deductions are taken because people do not qualify for the credits because they make too much money.

Check with your family accountant for these huge tax savings. You have nothing to lose.

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