Tax guide

For Students and New Grads

Are there tax breaks for education expenses and student debt?

Absolutely! If you’re a college student, a student’s parent, a graduate with student loan debt, or an employee seeking further education in your field, you could qualify for one of these key tax breaks:

  • The American Opportunity Credit
  • The Lifetime Learning Credit
  • The Student Loan Interest Deduction

What is the American Opportunity Credit?

The American Opportunity Credit is good for four years of undergraduate higher education, and it will pay up to $2,500 for qualifying expenses for each qualifying student. Up to $1,000 of that is refundable.

There are, of course, other rules and limits, but don’t worry--we’ll calculate if you qualify in the background when you file with 1040.com. Why bother with the math when you have a bunch of tax geeks on your side?

What is the Lifetime Learning Credit?

The Lifetime Learning Credit is worth up to $2,000 per year, but is nonrefundable. And that's per tax return, not per student. This credit can be used for undergraduate expenses, graduate school, even professional or vocational courses. Plus, there’s no limit to how many years you can claim it.

Again, there are a myriad of other rules that apply, but that’s what you need to know to get started.

What is the Student Loan Interest Deduction?

The student loan interest deduction helps cover the interest you pay on your student loans. This deduction can reduce your taxable income by up to $2,500, and you can claim it even if you don’t itemize deductions—but it’s not available if you are married and filing separately.

More rules? Yep, even here. That said, we like to keep it simple for you. We’ll keep the more complicated calculations out of your way so you don’t get overwhelmed by all the variations.

Which education tax break do I qualify for?

Each credit and deduction has its own rules, income limits, and other qualifications. It gets complicated quickly, but the good news is you don’t need to worry about it.

Why? Because when you file with 1040.com, we ask you simple questions and do all the calculations in the background. Once we have a few basic pieces of info, we can easily determine which of the tax breaks you qualify for, and boom—you get your maximum refund, without having to do mounds of homework.

Ready to jump in and get your taxes done? Just sign up or log in today to get started—we’ll see you there!

(Still want to learn more? You really don’t have to, but if you’re into it, check out the IRS.gov page on education tax breaks for more info on income limits and qualification rules. You can even double check our calculations—be prepared to be wowed!)

Also see:
Tuition Deduction vs. Education Credits
How to Deduct Student Loan Interest

It’s not too good to be true. See what others are saying about filing taxes online with 1040.com