Tax deductions work to reduce your taxable income. Tax credits work to reduce your tax liability dollar-for-dollar.
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.
If you trade stocks in a taxable account, you hopefully only make gains. But, we live in a realistic world. Not all of our investments will turn out to be winners.
If you pay your own way for college, including tuition, fees, and other qualified higher education expenses, you may have the ability to claim the American Opportunity tax credit (AOTC) to lower your tax bill dollar-for-dollar.
Closely related to the American Opportunity tax credit, this one also lowers your tax bill on a dollar-for-dollar basis, but only one can be claimed. The Lifetime Learning Credit can help pay for undergraduate, graduate or professional degree courses.