As the year draws to a close, your employees will soon be turning their attention to W-2's, 1040's, and that all-important tax refund. Many of your employees are chomping at the bit to get some money back from the IRS, particularly those currently paying for college for their children or themselves. For them, money is inevitably tight and stress levels are through the roof.

Options for Education Tax Breaks

Robert Weinerman of College Coach recently blogged about education tax breaks. He answered one of the most frequently asked questions he gets: "Can I deduct the payments I make for my child's college tuition expenses?"

For most parents of traditional undergraduate students, the biggest available tax break is the American Opportunity Credit (AOC). Taxpayers who qualify for the AOC may receive a $2,500 credit if they pay $4,000 or more in tuition, required enrollment fees, and course materials that the student needs for a course of study. Credits are better than deductions: they reduce the family's tax liability dollar for dollar!

The AOC is usually the most valuable tax break for working parents who are paying for their children's education. Employees in school themselves may not meet the AOC's stringent qualifications. For adult learners who don't qualify for the AOC, Robert offers another option:

A second tax break, called the Lifetime Learning Credit, is smaller than the AOC, but available to graduate students and students taking classes at eligible colleges who might not be pursuing a degree or certificate there, but are instead working toward acquiring or improving job skills. It has tighter income restrictions, but is worth investigating for students casually taking classes to acquire or improve their employment-related education.

Read Robert's full piece on college tax breaks here.

Educating Employees on Education Tax Breaks

Many of your employees could benefit from the above tax credits. A massive number of employees (on the order of 1.5 million taxpayers) aren't using the education tax breaks they're eligible for -  simply because they don't know about or understand how to use them.

That's why College Coach offers the Spotlight Series program Tax Breaks for Parents Paying for College as part of our comprehensive suite of educational programming. This on-demand webinar reviews education tax credits and deduction options and describes the common barriers to claiming them. With personalized counseling, employees can discuss their financial situation with a college finance expert. They can ensure that they maximize all available tax breaks and don't miss out on the free money they may be entitled to.

College is one of the biggest costs an employee will face in their lifetime, and one of the biggest drags on employee productivity and engagement. I encourage employers seeking to boost employees' financial wellness to consider adding college finance advising to their benefits mix. Imagine adding $2,500 to your employees' pockets -  and the associated boost in morale this tax break would bring -  while barely making a dent in your workplace's bottom line.