April 17 Is Tax Day: NASFAA Guide Helps Families Understand Education Tax Benefits & Get The Money They Deserve
FOR IMMEDIATE RELEASE
Contact: Haley Chitty
Director of Communications
March 19, 2012 -- What’s better than getting money back from Uncle Sam for your qualified education expenses? Having two extra days to file your 2011 taxes!
The National Association of Student Financial Aid Administrators (NASFAA) has released a new, free Tax Benefits Guide designed to help students and families navigate the sometimes thorny task of determining which higher education tax benefits you qualify to receive—and which will secure you the maximum return on April 17.
The federal government provides roughly $15 billion in tax savings to more than 10 million students and families every year. On average, these tax benefits help qualified families save $1,329 annually. These incentives come in a couple of forms:
- Tax Credits directly reduce the amount of tax for which you are liable; and
- Tax Deductions reduce the amount of income on which you pay taxes
“NASFAA's Tax Benefits Guide is intended to ensure that no family leaves money on the table for qualified educational expenses this tax season,” said NASFAA President Justin Draeger. “Financial aid administrators partner with families—every day, in every institution of higher education, as we help students achieve their educational goals and make the best fiscal decisions.”
If you attended college in 2011, you may qualify for more than one of these incentives, but there are some restrictions. It's a good idea to calculate your taxes multiple ways to find the maximum benefits available to you.
- The American Opportunity Tax Credit offsets what you pay for the first four years of higher education by reducing the amount of income tax you pay. In addition, the credit is partially refundable so you may be able to get a check from the IRS even if you don’t owe any income tax. This credit provides up to $2,500 per student.
- The Lifetime Learning Credit is available for all types of postsecondary education, and may be particularly helpful to graduate students. Generally, you should only use this credit once you have exhausted your eligibility for more generous credits. This credit provides up to $2,000 per tax return (not per student).
- The Tuition and Fees Deduction can reduce your taxable income by as much as $4,000 and may help if you are not eligible for any of the tax credits.
- The Student Loan Interest Deduction allows you to deduct interest paid on student loans for yourself, your spouse, or your dependents. It can reduce your taxable income by as much as $2,500, depending on the amount of interest paid and your income.
Additional detail on eligibility requirements is included in NASFAA’s Tax Benefits Guide for students and families.
The National Association of Student Financial Aid Administrators (NASFAA) is a nonprofit membership organization that represents nearly 20,000 financial aid professionals at 2,800 colleges, universities, and career schools across the country. Each year, financial aid professionals help more than 16 million students receive funding for post secondary education. Based in Washington, D.C., NASFAA is the only national association with a primary focus on student aid legislation, regulatory analysis, and training for financial aid administrators. For more information, visit www.nasfaa.org.