CPA David Young of the New York State Society of CPA’s discussed some of the ways college students and their parents can take advantage of changes in the tax laws Monday during News 8 at Sunrise.

“There’s good news for the college students,” said Young. “This year, the tax law changed and the standard deduction actually doubled, so that student can actually make more this year — at least at the federal level — and not have to pay any income taxes at all. It’s most likely that a college student, and all the money they made this summer, is going to be tax free at the federal level. They can make up to $12,000 with no tax. New York State didn’t change their standard deduction, so they might have New York State tax, but no federal tax.”

Young said there is some good news on the tax front for parents of college students, or prospective students as well. “For the 529 Plan, you can open up that account. It can be a parent or grandparent opening up for the student. If they’re Married Filing Jointly returns, they can actually deduct up to $10,000 on the New York State side, and if they’re single, it’s up to $5,000. That’s a great opportunity to save for college, if you want that money to grow tax free. That’s a great opportunity.”

There are several ways to claim education tax credits.

With the American Opportunity Credit students are eligible to claim up to $2,500 for the first four years of post-secondary education for tuition and fees, course-related books, supplies, and equipment. Couples filing jointly who earn less than $160,000 and single-filers who earn less than $80,000 are eligible.

The amount of the credit is 100 percent of the first $2,000 of qualified education expenses you paid for each eligible student and 25 percent of the next $2,000 of qualified education expenses you paid for that student. But, if the credit pays your tax down to zero, you can have 40 percent of the remaining amount of the credit (up to $1,000) refunded to you.

The Lifetime Learning Credit allows students earning less than $66,000 (single-filers) or $132,000 (married, filing jointly) to claim up to $2,000 for education-related expenses.

The amount of the credit is 20 percent of the first $10,000 of qualified education expenses or a maximum of $2,000 per return. The LLC is not refundable. So, you can use the credit to pay any tax you owe but you won’t receive any of the credit back as a refund.

Like the American Opportunity Credit, students earning less than $80,000 (single) or $160,000 (married, filing jointly) can deduct up to $4,000 in tuition and fees on their annual tax returns.

Young noted, you cannot double-dip tax breaks—that is, claim the credit for the same expenses you paid with tax-free money from your 529 plan—so it’s best to pay at least $4,000 of tuition charges from money outside of your 529. Then you can use the 529 money tax-free for the remaining tuition and fees, plus other eligible expenses, such as room and board, books, and a computer and Internet access.

If you’ve taken out a federal or private student loan, you’re eligible to deduct up to $2,500 worth of interest paid on the loan as an “above-the-line” exclusion from your income. You don’t have to itemize your deductions in order to claim it. Students with a modified adjusted gross income (MAGI) less than $80,000, or $160,000 if filing jointly, are eligible.

Young also noted if you’re a student and your parents are claiming you as a dependent, you are not eligible to claim deductions or credit yourself. So before you file, confirm whether or not your parents will be claiming you as a dependent on their taxes this year. According to the IRS, your parents can claim you as a dependent until you are 19, but if you’re a student, that dependency status can be extended until you’re 24. If this is the case, you can still file taxes, but you need to indicate that someone else can claim you as a dependent on your tax return. And you can’t claim any credits or deductions your parents are already taking.

For more “smart money” advice from the New York State Society of CPA’s, visit their website, click here.