Cutting College Costs:Tax Deductions & Credits

If you or a loved one is in college, than your mind is no doubt focused on the cash that’s going out instead of the money that should be coming in from Uncle Sam.

“I mean, yea, they’re really missing out because you do get a lot,” said Susan Gebregiorgis, a second year nursing student at Kent State University. 

The 19-year-old has never been one to chat up her friends about tax deductions or credits, but now that she’s paying her own way through school, that’s about to change.

“I’m going to file for the tax credit so hopefully I’ll get a lot back,” she said, speaking about the American Opportunity Tax Credit.  According to the IRS, college students whose “modified adjusted gross income” is $80-thousand or less qualify for the credit. 

The max for which they’re eligible is $2,500 a year and applies, not only towards tuition, but course materials too. 

“If they don’t qualify for the credits there are tax deductions for tuition,” said Mark Evans, Director of Student Financial Aid, “Interest on student loans can be deducted.” 

Evans said come the first of the year, schools will be sending out forms, called the 10908T.

“It’s a statement that shows them what would be allowable, deductions and expenses against those,” he said.

Evans advises students to take advantage of all the federal government has to offer, he also said it’s important to keep track of receipts from any  college expenses; Uncle Sam does not give money back unless students have proof of what they’ve  spent.

“You’re not going to miss out this year?” Call for Action Reporter Lorrie Taylor asked Gebregiorgis, “Definitely not!”