Chapter 33

Educational Tax Benefits

The tax law provides several tax benefits for people attending school. If you can take advantage of them, you are in effect receiving a government subsidy that lowers the cost of education.

The American Opportunity Tax Credit, the Lifetime Learning credit, the student loan interest deduction, and state-sponsored college tuition programs and Coverdell ESAs can provide substantial tax savings, but these tax benefit provisions are hedged with restrictions that may bar or limit their availability. If Congress extends it to 2012, the above-the-line deduction for higher education tuition and fees may be available if you do not claim an American Opportunity or Lifetime Learning credit.

33.1 Scholarships and Grants

33.2 Tuition Reductions for College Employees

33.3 How Fulbright Awards Are Taxed

33.4 United States Savings Bond Tuition Plans

33.5 Contributing to a Qualified Tuition Program (Section 529 Plan)

33.6 Distributions From Qualified Tuition Programs (Section 529 Plans)

33.7 Education Tax Credits

33.8 American Opportunity Credit

33.9 Lifetime Learning Credit

33.10 Contributing to a Coverdell Education Savings Account (ESA)

33.11 Distributions From Coverdell ESAs

33.12 Tuition and Fees Deduction

33.13 Student Loan Interest Deduction

33.14 Types of Deductible Work-Related Costs

33.15 Work-Related Tests for Education Costs

33.16 Local Transportation and Travel Away From Home To Take Courses