Financial Planning for College: Tax Tips for Parents in Greece, NY

Paying for college is one of the largest financial commitments families face, and for many parents in Greece, NY, it can feel overwhelming. From tuition and housing to books and meal plans, the costs add up quickly. The good news is that the IRS provides several tax benefits designed to make higher education more affordable. By planning ahead and working with a trusted local CPA, you can take advantage of credits, deductions, and savings strategies that lighten the financial burden.

At Nacca & Capizzi, LLP, we’ve been helping Rochester-area families prepare for college costs since 1979. Here are the most important tax tips and planning strategies for parents looking to make smart financial decisions when sending their children to college.

1. Take Advantage of Education Tax Credits

The IRS offers two major tax credits for families paying for higher education:

• American Opportunity Tax Credit (AOTC): Worth up to $2,500 per eligible student per year for the first four years of college. This credit covers tuition, required fees, and course materials. Up to 40% may be refundable even if you owe no tax.
• Lifetime Learning Credit (LLC): Worth up to $2,000 per tax return for tuition and fees. There’s no limit on the number of years you can claim this credit, making it useful for graduate students and ongoing education.

Choosing the right credit depends on your income level and your child’s enrollment status. Our tax services team can help you determine which credit offers the most benefit.

2. Explore 529 College Savings Plans

New York State offers a 529 College Savings Program, which allows parents to save for education expenses with significant tax advantages. Contributions grow tax-free, and withdrawals for qualified expenses (like tuition, books, and housing) are also tax-free. Plus, New York State residents can deduct up to $5,000 per year ($10,000 for married couples) on their state income taxes for contributions.

Working with a local CPA ensures you maximize both the federal and state tax benefits of a 529 plan.

3. Deduct Student Loan Interest

If you or your child take out student loans to cover college costs, you may be eligible to deduct up to $2,500 of student loan interest each year. This deduction applies even if you don’t itemize deductions. However, income limitations apply, and many families miss out because they don’t plan ahead.

Our team at Nacca & Capizzi reviews your situation to determine whether the deduction and credits apply to you and how to incorporate them into your financial plan.

4. Keep Records of Qualified Expenses

To claim education credits or deductions, you must provide documentation of qualified expenses. This includes tuition bills, receipts for required books, and records of housing costs. Families that keep accurate records throughout the year are more likely to claim the full benefits available to them.

If you need help staying organized, our bookkeeping services can assist families as well as businesses in managing expenses properly.

5. Coordinate Benefits Between Parents and Students

Sometimes, the best tax strategy involves deciding whether the parent or the student claims education credits. In some cases, having the student claim the credit results in greater tax savings. Strategic planning ensures you don’t miss opportunities by overlapping or misapplying benefits.

Through our advisory services, we help families evaluate all options and choose the best approach for maximizing college-related tax savings.

6. Don’t Forget About Scholarships and Grants

Scholarships and grants generally don’t count as taxable income if used for qualified education expenses. However, amounts used for non-qualified expenses (like room and board) may be taxable. Families often overlook this distinction, which can result in unexpected tax bills.

Our CPAs provide guidance to ensure that scholarship and grant money is reported correctly on your tax return.

7. Plan for Future College Costs

If you have younger children who will be attending college in the future, starting early is the best strategy. Regular contributions to a 529 plan, combined with year-round tax planning, help spread out costs and minimize financial strain.

Our business and family financial strategies team works with parents to develop customized plans that support long-term educational goals.

8. Be Prepared for IRS and State Deadlines

Education credits and deductions must be claimed on your annual tax return. Missing deadlines or filing incorrectly can result in losing valuable benefits. Local CPAs are familiar with both IRS and New York State filing rules and ensure nothing slips through the cracks.

Our team helps families in Greece and Rochester stay compliant with all filing due dates and requirements.

Why Parents in Greece, NY Choose Nacca & Capizzi

Since 1979, Nacca & Capizzi, LLP has been a trusted partner for families in Greece and Rochester. We understand that college planning is about more than paying tuition—it’s about ensuring your family’s financial stability for years to come. Our local expertise means we understand the specific tax rules and financial challenges faced by New York families.

From tax services and financial planning to record-keeping support, we provide a full range of solutions to make college more affordable and less stressful.

Plan Ahead for College with Confidence

Paying for college doesn’t have to derail your family’s financial future. With the right planning, you can take advantage of tax benefits, maximize savings, and reduce stress when tuition bills arrive. By working with a local CPA firm in Greece, NY, you’ll have peace of mind knowing that you’re making smart choices for your child’s education and your family’s finances.

Contact Nacca & Capizzi today to schedule a consultation and learn how our tax and financial planning services can help you prepare for college costs with confidence.

Contact Nacca & Capizzi, LLP

Address: 2430 Ridgeway Ave, Rochester, NY 14626
Phone: (585) 225-9290

Nacca & Capizzi, LLP — Trusted accounting, tax, and advisory services for families, individuals, and businesses in Greece and Rochester, NY since 1979.

Disclaimer: This article is for informational purposes only and should not be considered tax, legal, or financial advice. Every individual and family situation is unique, and tax laws frequently change. Always consult with a qualified professional advisor, such as the CPAs at Nacca & Capizzi, LLP, before making decisions related to your finances or taxes.