IRS Publication 970: Education Tax Benefits Overview

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IRS Publication 970

The IRS Publication 970 is about the tax benefits that are available for education. This publication is a piece of information that the United States Internal Revenue Service provides on its platform. This document provides information about the number of tax benefits that the federal government offers to students that are pursuing higher education.

In this article, you will learn some of the essential details about IRS Publication 970. Next up, you will find out whether you are eligible to get any benefits that the government provides as per IRS Publication 970. Then we will give you information about the types of tax credits that the IRS Publication 970 provides to students. Hence, to find out more about the benefits read on through to the end of the article.

Contents

What Is IRS Publication 970?

According to Investopedia.

IRS Publication 970 is a document published by the Internal Revenue Service (IRS) that provides information on tax benefits available to students and families saving or paying for college. It explains the tax treatment for the most common forms of college funding, such as scholarships, fellowships and grants, and tuition reductions.

If you are a person pursuing higher education, you can make use of the major tax benefits to get back some of the money as tax refunds. This will help you to spend on your tuition or loan interest. You can also be able to maximize your tax savings.

There are two major types of tax credits that the government offers as per IRS Publication 970:

1. The American Opportunity Tax Credit

2. The Lifetime Learning Credit

Apart from that, there are nine tax benefits present in the IRS Publication 970, which students and families can claim if the student is pursuing higher education. This will help them in reducing the income tax they owe to the government.

According to FreshBooks.com,

The publication also covers education saving plans, such as Coverdell accounts and 529 plans, student loan interest deduction, student loan cancellations and repayment assistance, qualified tuition programs (QTP), and business deduction for work-related education.”

Basically, in the IRS Publication 970, you will get an overview of the tax benefits that are available for students that are pursuing higher education. Since these tax benefits are extremely valuable, it is also important for students and their guardians to understand how the tax benefits work.

IRS Gov Publication 970 – What Is The Eligibility?  

The tax benefits, as per IRS Publication 970, are not meant for all. There are certain eligibility criteria outlined in the IRS Publication 970. Here are they:

1. The student must be enrolled in an educational institution where these tax benefits are applicable. However, most of the major colleges and higher educational institutions come under the radar.

2. The student must be pursuing a higher degree or any similar recognized credential at an institution that is eligible as per the tax benefits of IRS Publication 970.

3. The student must be enrolled at least half-time for being qualified for the tax credits given by the government for higher education.

4. The student must not be convicted of a felony drug offense to be eligible for tax benefits as per IRS Publication 970.

If you are a student, make sure that you meet all these four eligibility criteria as provided in IRS Publication 970. If you are eligible, you can receive the benefits to pay for your tuition, books, fees, and any other important expenses related to education. You can also get a lot of help as you try to pay for your student loans.

IRS Publication 970 Tax Benefits For Education And Tax Credits

According to FreshBooks.com,

The cost of post-secondary education is expensive, and the IRS offers a few tax credits to help offset the cost. The American Opportunity Tax Credit and the Lifetime Learning Credit are two popular tax credits, specifically for higher education expenses.

As per IRS Publication 970, there are many tax benefits you can get if you pursue higher education in an eligible institution. Some of them are discussed below:

The American Opportunity Tax Credit

Also known as the AOTC, it is the biggest tax benefit that the government offers to students pursuing higher education. The credit allows a student to claim up to $2500 per year for the first four years of school. This can be helpful as the students work towards getting a degree or a similar credential.

To get this tax credit, you must be paying for your tuition and other qualified expenses for the education of yourself, your dependent, or your spouse.

The Lifetime Learning Credit

According to StudentAid.gov,

The Lifetime Learning Credit allows you to claim up to $2,000 per student per year for any college or career school tuition and fees, as well as for books, supplies, and equipment that were required for the course and had to be purchased from the school.”

The LLC is available for any level of higher education, which also includes graduate school.

Furthermore, as per IRS Publication 970, the tuition and fees deduction lets you deduct up to $4000 from your taxes. To qualify for this tax benefit, you need to be paying for your higher education tuition and fees, your spouse, or your dependent. In this case, too, the deduction is available for undergraduate and graduate levels of education.

There are many more benefits for higher education students. To check, you can visit the IRS official website. For eligible expenses, there are a number of tax credits available, and the eligibility criteria are pretty straightforward.

Wrapping Up

As per IRS Publication 970, there are various tax benefits that the federal government provides to students that are saving for or paying for higher education. These benefits are also available for people that are paying education costs for someone else.

The rate of deductions on interest and learning credits are dependent on the adjusted gross income, and these are phased out on incomes above an annually adjusted level. What do you think about the benefits provided as per IRS Publication 970? Share your thoughts with us in the comments section below.

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