You can take some of the sting out of college bills by taking advantage of the credits, deductions and other tax-advantaged programs Congress has enacted to make college more affordable. At the end of this year, though, some of those benefits are scheduled to expire.
According to Block, the American Opportunity Credit, which gives families a tax credit of up to $2,500 per student, is going to expire on December 31, though congress may extend it.
In addition, Coverdell Education Savings Accounts, which are basically the college education versions of Roth IRA retirement accounts, currently allows people to put aside some $2,000 a year in investments for education. Families can withdraw money from these accounts tax-free as long as the withdrawals go to pay for education.
The savings accounts will continue to exist, but they’ll be much less helpful to families. As Block explains, “annual contributions will shrink to $500, and tuition for primary and secondary schools will no longer be a qualified expense.”