One of the most common tax deductions for college students is the student loan interest tax deduction. All college students who are paying back student loans are allowed to deduct the interest from what they owe from taxes, as long as they make less than $55,000 a year. Students or graduates making from $55,000 to $70,000 get some deduction, but the more they make in salary, the lower is the allowable tax deduction. Up to $2,500 in student loan interest can be deducted, and this tax deduction has no other qualification than income. In fact, even if the parents are paying student loan interest, the IRS reads it as if the student gets the money, then pays the loan--meaning the student can still take the full interest rate deduction.
The lifetime learning credit is a tax deduction for college students. This tax credit cannot be claimed with a hope tax credit in the same year by the same student. For this tax credit, students need to be enrolled in only one class. The student has no restrictions on what he or she is studying, and the student cannot be claiming the American Opportunity Tax Credit (AOTC). This tax credit is especially notable because many tax credits are not allowed to felons, but the lifetime learning credit can be taken by any individual with a felony conviction who is enrolled in a school and taking classes.
The American Opportunity Tax Credit (AOTC) is a tax deduction for college students that applies only to students who are in the first four years of post secondary education. Students have to be pursuing a specific four-year degree or equivalent professional credential. The student must also be in school a minimum of half time, and have no felony convictions. The only other restriction on this tax credit for college students is that students cannot claim the AOTC credit and the lifetime learning tax deduction at the same time. This tax credit can go up to $1,000 for students.