Tax Breaks When You’re Starting Out

Lower your taxes and keep more of your money by making the most of special tax breaks when you’re starting out.

Student-loan interest deduction. You can deduct up to $2,500 in student-loan interest if your modified adjusted gross income in 2019 is less than $70,000 if single or $140,000 if married filing jointly (and a partial deduction up to $85,000 for singles or $170,000 for joint filers).

Lifetime learning credit. If you take classes at an eligible educational institution, you could qualify for a tax credit worth up to $2,000, calculated as 20% of up to $10,000 spent annually on tuition and fees. To qualify for the full credit, your income must be less than $57,000 for single filers or $116,000 for joint filers (with partial credit up to $67,000 for single filers or $136,000 for joint filers). See IRS Publication 970 at www.irs.gov for details.

Retirement saver’s credit. If you contribute to a 457, IRA or other retirement-savings plan, you may be eligible for a tax credit worth between $200 and $1,000. To qualify, your adjusted gross income must be less than $32,000 if single, $48,000 if filing as head of household, or $64,000 if married filing jointly. For more information, see www.icmarc.org/saverscredit.

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