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Through New York's 529 College Savings Program and Federal Tax Credits you can save on taxes while you save for college. For additional information contact the Student Accounts Office.
It’s never too early to start thinking about saving for college. A 529 college savings program is a tax-advantaged savings plan that enables you to invest for college free of federal and, sometimes, state income taxes.* You can use this investment to pay for tuition, room and board, books, supplies, and other qualified higher education expenses. To learn more about the 529 College Savings Program, go to the New York State Higher Education Services Corporation (HESC) at www.hesc.com. *Earnings on non-qualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements.
American Opportunity and Lifetime Learning are nonrefundable federal tax credits created during the Taxpayer Relief Act of 1997. None of these tax benefits are traditional scholarship or financial aid programs. However, for families who qualify, these tax benefits can assist with the affordability of a education. The parent who claims the student on a tax return and pays the qualified tuition costs within that tax year may be eligible to qualify for the tax benefit. The actual amount of the credit depends on the taxpayer’s income, the amount of qualified tuition paid, and the amount of certain other scholarships, grants, and allowances subtracted from the tuition.
The American Opportunity Tax Credit allows taxpayers to claim a maximum credit of up to $2,500 for tuition and fee expenses paid on behalf of the taxpayer, taxpayer’s spouse, or a dependent. The Lifetime Learning Credit allows taxpayers to claim a maximum credit per family of $2,000, which equals 20 percent of up to $10,000 of expenses incurred during the taxable year for qualified tuition and fees for eligible students for post-secondary education. Family income limits apply.
Federal tax law allows tax filers to reduce the amount of income subject to tax by up to $4,000 for qualified education expenses paid during the tax year. This deduction is not available in combination with the American Opportunity or Lifetime Learning tax credit for the same person, or in combination with certain other tax benefits available for higher education. Family income limits apply.
We urge families to consult with their tax advisers for specific information. The IRS Web site at http://www.irs.gov and IRS Publication 970 provide more information on the tax laws affecting the financing of higher education.
Onondaga Community College
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