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Is College Tuition Tax Deductible?

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Is College Tuition Tax Deductible?

It's truly an understatement to say that college tuition has risen a lot in recent decades. If you wanted to attend a public 4-year institution in 2020, it would have cost you 31.4% more than it would have in 2010. And these numbers are only getting higher in 2023. If adjusted for inflation, college tuition in the United States has gone up 747.8% since 1963, according to EducationData.org. Whatever the reasons for the increase, one of the results has been the astronomical increase in student debt. As tuition costs increased, students and their families took out more debt, and today 45 million Americans owe more than $1.76 trillion in federal student loans. There are even 2.4 million retirees who still have student debt.

Table of contents

Key takeaways...Read more

College tuition tax deduction...Read more

What is a college tuition tax credit?...Read more

What college tuition credit is available to students?...Read more

Other ways to take deductions...Read more

Key takeaways

  • College tuition is not tax-deductible
  • Education tax credits can help with education costs
  • Interest on college loans is tax-deductible
Little action has been taken to make things easier for students until quite recently. President Biden's new plan to help working and middle-class federal student loan borrowers will offer ways to make payments a little easier. But there are already a few things students can do to make the cost of higher education easier to bear. If you're self-employed and going to school part-time, like so many other Americans, you'll want to know these tax tips.

College tuition tax deduction

"Is tuition tax deductible" is usually one of the first questions both students and parents of students ask. Unfortunately, the IRS does not allow anyone to take the cost of college tuition as a deduction from their taxable income. But, for those whose income falls below a certain threshold, the federal government does offer something called tax credits to help ease the burden of paying for an education in the US. Rather than a deduction, they are called a higher education tax credit or a college student tax credit. So, is college tuition tax deductible? Unfortunately no, but tax credits are.

What is a college tuition tax credit?

A college tuition credit is fundamentally different from a college tuition tax deduction in that it essentially reduces the amount of income tax you have to pay. It's like a discount on your tax bill after you've figured out all the tax you have to pay for the year. This is different from tax deductions, which are a sort of discount, too. But they reduce the amount of income you have that can be taxed, which is good if you're paying estimated taxes.
Image explaining the difference between tax deduction and tax credit. Deduction reduces taxable income, while credit reduces overall tax bill for certain income brackets. Relevant for taxes.
If you make $65,000 in in 2023, and your income tax rate is 22%, you'll owe $14,300 in taxes. The $2,000 laptop you bought for your online selling business can be a tax write-off if you're self-employed. That would lower your taxable income to $63,000, and you would owe $13,860 in 1099 tax. That's a $440 discount on your taxes. But if you claim that laptop as an educational expense and receive a $2,000 college student tax credit, for example, that would reduce your tax bill from $14,300 to 12,300. You would save $2,000 instead of $440.

What college tuition credit is available to students?

There a couple of tax credits the IRS makes available to students and their parents to help offset the cost of higher education.

American opportunity credit

Lifetime learning credit

Other ways to take deductions

A.I.-based tax service FlyFin makes finding every possible tax deduction easier than it has ever been for self-employed people and freelancers working their way through college. Expert CPAs are available 24/7 to guide you through filing 1099 taxes and can even help by preparing and filing your returns for you. FlyFin also offers a self-employment tax calculator and a library of information about all the deductions and tax credits available to self-employed individuals.

Deductible Education Expenses 2023

Education expenses like the interest on student loans can sometimes be deducted from your taxable income, and education tax credits can lower the amount that taxpayers have to pay in taxes.

Adjust For Inflations

The IRS has released its yearly inflation adjustment for the 2023 tax year, aimed to give US taxpayers relief from rising inflation.

Taxes on tips

Find out how tip money is taxed by the federal government and how you can know exactly what you need to pay.

Per diem meals

Here's how using the per diem deduction for business travel expenses can sometimes be a better option for self-employed people than itemizing every deductible travel expense.

Personal property tax deductions

Homeowners can save a significant amount by deducting their property tax payments from their taxable income. Here's how property taxes work and how they can be deducted.

Tax filing extension

The benefits and how-tos of filing for an extension on your tax return. Learn how filing extensions work and get step-by-step instructions on how to put them to work for you.

Sales tax deduction

Most states have sales tax in place for consumers. It can increase your spending but there are ways to deduct the tax on your tax return.

Are working clothes deductible

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PPP loan for self employed

The PPP loan assisted small businesses and those self-employed to pay employees during the pandemic.

Are business gifts deductible

Giving gifts to clients or employees is a wonderful gesture of goodwill. However, some gifts are considered taxable and must be included on a tax return.

Simple IRA contribution limits

Opening up a SIMPLE IRA is a great way to save for retirement. It’s an option if you're a W-2 employee or self-employed.

Cash vs accrual

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Minimum earning for tax filing

Taxes are complex, and you’re not always sure if you should file taxes or if you even earn enough income to start filing your IRS taxes.

Missed tax deadline

Missing the IRS tax filing deadline can be a costly mistake, especially if you owe tax money. You can avoid that if you know all the IRS deadlines and what you owe them well before the tax season.

Jail for not filing taxes

Tax fraud and tax evasion are two serious offenses that may lead to jail time, and to avoid the consequences, you must file your taxes timely and accurately.

Are settlements taxable

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Business vs commuting miles

Some of the miles you drive in your car can give you a sizable tax deduction, and some can't. Here's how to know the difference.

Goodwill donations tax deductions

Charitable goodwill donations help fellow Americans get through tough times, but these donations can also be written off your taxes.

How to escape IRS audit notice

The IRS may send you an audit letter requesting to review your financial information. There are several reasons why you might get an IRS tax audit letter.

Quarterly taxes due dates

Knowing the deadlines for quarterly tax payments is essential to making your payments on time and avoiding penalties.

1099 For Rent

Whether you're a landlord, property manager or tenant, the IRS has rules in place when it comes to the 1099 form for rental income.

1099 Workers Comp

Workers' compensation protects workers from injury or illness while on the job. A lot of businesses require independent contractors to have their own coverage.

Flyfin Vs Turbo Tax And HR Block

Many options are available to get help with tax filing, and knowing which one is best for you can be difficult. There are a few things about FlyFin's tax service that save taxpayers more than any other service is able to.

1099 Business Vs Hobby Tax Rules

The IRS has set rules for determining whether an activity is a hobby or a business. Hobby loss rules determine whether your expenses are tax deductible or not.

Deductible Education Expenses 2023

Education expenses like the interest on student loans can sometimes be deducted from your taxable income, and education tax credits can lower the amount that taxpayers have to pay in taxes.

Adjust For Inflations

The IRS has released its yearly inflation adjustment for the 2023 tax year, aimed to give US taxpayers relief from rising inflation.

Taxes on tips

Find out how tip money is taxed by the federal government and how you can know exactly what you need to pay.

Per diem meals

Here's how using the per diem deduction for business travel expenses can sometimes be a better option for self-employed people than itemizing every deductible travel expense.

What’s FlyFin?

Wondering how to file 1099-MISC easily? FlyFin is the answer. FlyFin caters to the tax needs of freelancers, gig workers, independent contractors and sole proprietors. Using a powerful A.I., FlyFin tracks all your business expenses automatically. But anyone can file taxes through FlyFin! Our CPA team files a guaranteed 100% accurate tax return for you – to save you a couple thousand dollars and a ton of time on your taxes. You can download the FlyFin app and have your taxes filed in less than 15 minutes, saving you time and money.
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