What Tax Breaks Are Students Entitled To?

February 26, 2021

Students enjoy tax break eligibility in numerous ways, such as through tax credits. If you started or continued your education in the last year, there’s tax information your Los Angeles accounting firm wants you to know about. 

Education Tax Credits

Two tax credits are available to students who qualify. One is the American Opportunity Credit that provides four years of undergraduate assistance. The credit pays up to $2,500 annually for eligible students. They receive up to $1,000 in refunds if the credit eliminates owed taxes. To qualify for this credit, the student must not have any felony drug convictions by the end of the tax year and attended school at least half the time during one academic period. The student must also pursue a degree or related credential and did not complete the first four years of a college education at the start of the tax year. 

Students can also use the Lifetime Learning Credit to pay for higher education expenses, which is worth up to $2,000 annually. It is non-refundable and can be applied for undergraduate, graduate, vocational, or professional courses. To claim the credit, the individual must take courses or is otherwise enrolled at a qualifying educational center for at least one academic period from the tax year’s start. Other qualifications include taking higher education courses to obtain a degree or credentials that improve employment opportunities. Individuals with MAGI that is $69,000 or higher cannot claim the credit. 


Individuals enrolled in higher education classes as well as those paying on their student loans can deduct loan interest for the tax year. Students can also deduct qualifying educational expenses, including tuition and related fees, books, equipment, and supplies, room and board, and other necessities, such as transportation to and from class. Additional deductions include qualifying work-related education, such as work required by the educational institution. 

It is possible to claim education expenses even if they are not required by the employer. As long as they help the individual maintain or improve their skills, such as continuing education classes for dentists, the students can claim the deductions. 

Discuss these and other student tax breaks and deductions with Wallace & Associates, the accountant service in Los Angeles. The Encino tax consultants provide a range of related services.