For Students and New Grads

Updated for filing 2024 tax returns

Are there tax breaks for education expenses and student debt? 

Of course. 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: 

• American Opportunity Credit 

• Lifetime Learning Credit 

• Student Loan Interest Deduction 

What is the American Opportunity Credit? 

The American Opportunity Credit (AOTC) is a credit for qualified education expenses paid by an eligible student for the first four years of higher education. You can get a maximum annual credit of $2,500 per eligible student. The AOTC is good for four years of undergraduate higher education and pays as much as $2,500 for each qualifying student. Up to $1,000 of that is refundable. 

There are, of course, other rules and limits, but don’t worry — if you qualify for the AOTC, we will calculate the credit 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 a nonrefundable credit for qualified tuition and related expenses paid for eligible students enrolled in an eligible educational institution. The LLC is worth up to $2,000 per year, per tax return (not per student). This credit can be used for undergraduate expenses, graduate school, even professional or vocational courses. There’s no limit to how many years you can claim it. 

What is the Student Loan Interest Deduction? 

The student loan interest deduction is a reduction of your taxable income by up to $2,500 and helps cover the interest you paid on your student loans. You can claim Student Loan Interest Deduction even if you do not itemize deductions—but it’s not available if you are married and filing separately. You may deduct the lesser of $2,500 or the interest you paid during the year. The deduction is gradually reduced and eventually eliminated by phaseout when your modified adjusted gross income (MAGI) amount reaches the annual limit for your filing status. 

Feel good about student tax breaks 

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 information, we can easily determine which of the tax breaks you qualify for so that you get your maximum refund without having to do mounds of homework. 

Now that's a good reason to feel good about taxes. 

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