In the past 20 years, the cost of attending college has tripled and increased almost 8 times faster than wages.
While public higher education is mostly a state responsibility,
the federal government does incentivize continuing education through tax deductions and tax credits.
To understand how you might take advantage of these tax deductions,
we’ve gathered 7 tax deductions and credits you should know to save the most money on your tax bill this year.
What is a Tax Deduction vs. a Tax Credit?
Tax deductions work to reduce your taxable income.
Tax credits work to reduce your tax liability dollar-for-dollar.
This is a valuable tax deduction for students in the long-run.
1. Retirement Account Contributions
2. Capital Gain Losses
When you choose to sell your losing positions, you can harvest these tax losses to lower your taxable income.
3. American Opportunity Tax Credit
If you pay your own way for college, you may have the ability to claim the AOTC to lower your tax bill dollar-for-dollar.
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