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The Ultimate Saving Taxes on College Debt Quiz
by Staff
There are many ways to help reduce the cost associated with education. Most of them involve saving for education and receiving tax benefits on the savings or claiming tax deductions and tax credits. Take our quiz to help you zoom in on tax benefits associated with education costs.

What is a tax credit?

  • any amount that you are allowed to deduct from your taxable income
  • any amount that you are allowed to deduct from the income tax that you owe
  • an amount that you will receive from the IRS even if you have no taxable income

What is adjusted gross income?

  • total gross income minus deductions claimed
  • total gross income minus credits claimed
  • total gross income minus deductions and credits

What is the Hope/American Opportunity Learning Credit?

  • A credit of up to $2,500 available for each of two years postsecondary education.
  • A credit of up to $2,500 available for each of four years postsecondary education.
  • A credit of up to $1,500 available for each of four years postsecondary education.

What is the Lifetime Learning tax credit?

  • A credit of 10 percent on up to $10,000 in tuition and fees in any year a course is taken to improve job skills.
  • A credit of 15 percent on up to $10,000 in tuition and fees in any year a course is taken to improve job skills.
  • A credit of 20 percent on up to $10,000 in tuition and fees in any year a course is taken to improve job skills.

What is important to remember about the Hope/American Opportunity Learning and Lifetime Learning tax credits?

  • Both have requirements that you must earn less than a maximum modified adjusted gross income to qualify.
  • You may only claim one of the credits in any tax year and not both.
  • Both of the above answers apply to the Hope/American Opportunity Learning and Lifetime Learning tax credits.

How many possible education deductions are available to reduce your federal taxable income?

  • five
  • three
  • two

If you qualify, how much may you deduct in student loan interest per tax return?

  • up to $2,500
  • up to $3,000
  • Up to $3,500

What is an important restriction to remember before taking the qualified higher education deduction?

  • You may not claim this deduction if you claimed the student loan interest deduction.
  • You may not claim this deduction if you claimed any of the education credits.
  • You may not claim this deduction if you are self-employed and the qualifying student.

What is a major income exclusion that you can use to reduce your taxable income?

  • scholarship payments
  • secondary low-income education grants
  • excluded income on employer education assistance

How many programs, based on saving money for education, are available in order to earn interest without paying taxes on interest earned?

  • one
  • two
  • three