Tuition Reimbursement & Tax Write Offs

Educational tax deductions and credits provide incentive for taxpayers to enroll in school. Tax deductions directly reduce taxable income, whereas, tax credits reduce the amount of tax you owe on a dollar-for-dollar basis and can even result in a tax refund.

Hope Credit

The Hope Credit is a nonrefundable tax credit available to students during the first two years of college. Students outside the Midwestern Disaster Area qualify for up to $1,800 benefit.

Lifetime Learning Credit

The Lifetime Learning Credit is a nonrefundable tax credit. Students outside the Midwestern Disaster Area qualify for up to $2,000 benefit.

Student Loan Interest Deduction

Some of the interest paid on student loans is eligible for a tax deduction. However, the authority requires that the student loan funds not be used for personal expenses.

American Opportunity Tax Credit

The American Opportunity Tax Credit is a refundable tax credit offered in 2009 and 2010. This is available during the first four years of studies with a maximum benefit of $2,500.

Double Benefits

Only one incentive is allowed each year per student.

References

• IRS: Publication 970 - Tax Benefits for Education