Tax Benefits
Tax benefits may be available to you if you are saving for or paying education costs for yourself or, in many cases, another student who is a member of your immediate family. Most benefits apply only to higher education.
Current tax credits that are available are:
- The American Opportunity Credit
- The Lifetime Learning Credit
Other benefits include:
- Student loan interest deduction
- Tax-free treatment of a canceled student loan
- Tax-free student loan repayment assistance
- Tuition and Fees for education deduction
- Establish and contribute to a Coverdell Education Savings Account (ESA) which features tax-free earnings
- Participate in a qualified earnings program, also referred to as a 529 Savings Plan, which features tax-free earnings
- Take early distributions from any type of individual retirement arrangement (IRA) for education costs without paying the 10% additional tax on early distributions
- Cash in savings bonds for education costs without having to pay tax on the interest
- Receive tax-free educational benefits from your employer
- Take a business deduction for work-related education
More information on these benefits are available on the following websites provided by the Internal Revenue Service: