Wealthy Living

7 Tax Deductions and Credits for College Students to Save Money

In the past 20 years, the cost of attending college has tripled and increased almost 8 times faster than wages.

While public higher education is mostly a state responsibility, the federal government does incentivize continuing education through tax deductions and tax credits.

To understand how you might take advantage of these tax deductions as a college student or recent graduate, we’ve gathered 7 tax deductions and credits you should know to save the most money on your tax bill this year.

What is a Tax Deduction vs. a Tax Credit?

Tax deductions work to reduce your taxable income.

For example, if you earn $50,000 in adjusted gross income as a single filer and claim a tax deduction worth $1,000, your net taxable income becomes $49,000.

With this income, you fall into the 22% income tax bracket, saving you $220 in taxes, all things equal.

Tax Deductions and Credits

1. Retirement Account Contributions (IRA)

It might seem odd to start with retirement when you’re just starting on your career journey or only have a weekend job, but this is a valuable tax deduction for students in the long-run.

Before picking a stock trading app to invest this money, make sure you do your stock market research first.

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