Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Americans Missing out on Tax Breaks

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Americans Missing out on Tax Breaks

Article excerpt

Families eligible to claim higher education tax deductions and credits can effectively use them to reduce overall college costs, yet about half of American households are missing out on the opportunity by not taking full advantage of tax breaks available to them.

In its annual report "How America Pays for College," private student loan lender Sallie Mae found less than half of the 21 million students and families who ponied up for college tuition, fees or interest on a student loan in 2014 used tax credits and deductions as a way to help cover college costs.

"Quite frankly, if you are eligible, you don't want to leave that money on the table," said Rick Castellano, vice president of communications at Sallie Mae in Newark, Del.

The federal government last year provided more than $15.6 billion in education tax credits and deductions, with families receiving an average of about $1,200, according to the College Board. Sallie Mae estimates about the same amount or more of higher education credits and deductions went unclaimed.

"We found less than half of families are using tax credits and deductions as a way to lower tuition costs," Mr. Castellano said. "Some folks just aren't aware these tax credits and deductions are available to them."

Two tax credits available to families with children in school - the American Opportunity Tax Credit and the Lifetime Learning Credit - are education credits that families can subtract in full from their federal income tax bill, not just deduct from taxable income.

With the American Opportunity Tax Credit, eligible families may qualify for a maximum annual credit of $2,500 per student. To be eligible, a student must be enrolled at least half-time in a degree or other recognized educational program and cannot have completed the first four years of post-secondary education before 2014.

While the American Opportunity Tax Credit is limited to undergraduate students enrolled at least half-time, the Lifetime Learning Credit can be claimed by anyone taking classes in order to acquire or improve job skills, including undergraduate, graduate and professional degree courses. …

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