College Planning

How to Pay for College and take Advantage of Higher Education Tax Breaks

This article explains three educational tax breaks that most students can take advantage of: the Lifetime Learning Credit, the American Opportunity Tax Credit, and the tuition tax deduction.

How to Pay for College and Take Advantage of Higher Education Tax Breaks

Whether you have dependents living at home or if you're a student saving for college, here are some educational tax breaks that you should know about come tax time.

The Lifetime Learning Credit

The Lifetime Learning Credit (LLC), is a federal tax credit that just about anyone who is taking college courses can take advantage of. It provides a tax credit up to 20 percent of the first $10,000 in tuition and other qualifying expenses per year. To be eligible, you need to be enrolled in at least one course at a qualifying higher education institution.

The American Opportunity Tax Credit

The American Opportunity Tax Credit (AOTC) provides up to $2,500 in tax credits on the first $4,000 of qualifying educational expenses, and applies to all four years of an undergraduate education. It is a partially refundable credit so in the event your tax liability is at zero, you may still be eligible to receive up to $1,000 of the credit. To be eligible, you must be in the first four years of your education and be enrolled at least part-time in a college, university or other accredited post-secondary educational institution.

The tuition tax deduction

If you don't qualify for the AOTC, the tuition tax deduction may be your next best bet. With this credit, you may be able to reduce your taxable income up to $4,000. To be eligible in 2015, you need to have a modified adjusted gross income of $65,000 or below if single, and $130,000 if married and filing jointly with your spouse.

To find out more about educational credits, deductions, and savings plans, visit the IRS Tax Benefits for Education Information Center.

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Pay for College

If you're looking for ways to help pay for college, be sure to take advantage of the many different tax breaks that could make it easier for you to pay for college. These three educational tax breaks present just a few of the ways you can take advantage of educational credits come tax time. For more information, visit the Protective learning center.


All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

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Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax-related decisions. For information about Protective Life and its products and services, visit www.protective.com.

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