An Unconventional Tax Saving Strategy for Parents of College Students

Part 2—Lifetime Learning Credit

Clement Chen, PhD, CPA, and Keith T. Jones, PhD, CPA, and Zhaochu Li, PhD, and Iryna P. Lytvynenko

In BriefThe Lifetime Learning Credit (LLC) and the American Opportunity Credit (AOC) offer significant tax savings for education expenses. This second article in a two-part series for parents of college students explains in detail a tax-saving strategy involving scholarships and the Lifetime Learning Tax Credit. It explains how a taxpayer can utilize a strategy of including tax-free scholarships in income to potentially save on overall taxes for a family; it is particularly relevant after the recent change to the “kiddie tax” under the Secure Act of 2019.