What Is the Deductible With a Dependent Who Is a Full-Time College Student?
If you have a dependent who is a full-time college student, you have exemptions, deductions and tax credits you can claim. As of September 2011, the federal tax code offers a variety of tax breaks for families with college students. Familiarize yourself with all of the options you have for reducing your taxes.
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Withholding Exemption for Full-Time Student
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If you have a child living at home who goes to college, you can claim an exemption on your W-2 withholding with your employer. This means less tax will be withheld from your paycheck because you will owe less tax at the end of the year.
Dependent Tax Deduction
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You get $3,650 taken off your taxable income for your dependent child who is attending school full time. You can take this deduction even if the child is over 18. You can claim a full-time student as a dependent up to age 24.
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American Opportunity Credit
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You can claim a tax credit of up to $2,500 per student for your dependent who attends school full-time. Your income must be less than $90,000, or less than $180,000 for married couples filing a joint return. A tax credit gets taken directly off your tax bill, instead of just reducing your taxable income.
Lifetime Learning Credit
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You can claim a tax credit of $2,000 of per tax return if you paid college tuition. Your income must be $60,000 or less ($120,000 for a married couple filing jointly). You can claim this credit for each year your dependent student is in school.
Tuition and Fees Deduction
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If you don't qualify for the American Opportunity Credit or the Lifetime Learning Credit, you can still deduct tuition and expenses for your child's education. Deductions are less effective than tax credits, but they do reduce your taxable income.
Interest on Student Loans
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You can deduct all interest on student loans you pay for your dependent child. This deduction has no income restrictions and applies for the life of the loan, unless the child takes over payments.
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