Families that have students in college should be sure to check with their tax preparer in the coming filing season to learn more about the various deductions and other benefits that may be available to them.
The IRS Web site offers various details about initiatives to help students defray the cost of a higher education.
For example, 529 Plans offer a tax-free way for families to save for expenses like computers, books, fees and school supplies, among other things, such as services for special needs students. The IRS notes that contributions to such plans are not deductible, but come with no income limit for contributions. The distributions are tax-free when used for eligible expenses for a student.
"With many families struggling to afford college, we want every eligible taxpayer to know about their options and take advantage of all the tax breaks they can. 529 plans have become a very attractive way to save for college, and our Web section is designed to help people get information about these plans," said IRS Commissioner Doug Shulman.
Students can also defray education costs with help from an American Opportunity Credit, which was included in last year's federal stimulus bill. This credit applies to 100 percent of the first $2,000 a student spends on eligible supplies and other expenses, as well as 25 percent of the next $2,000 for a full credit of $2,500.
Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.