Holiday Money! These Tuition Tax Tips Can Add Up to $2,500
Why are we spoiling your holidays talking about tax? Because the decisions you make this December could generate financial rewards for you when you file your income tax in few months…consider it belated Holiday Money!
Those who start their college education before December 31st can take advantage of tax perks come April and it can be a difference of up to $2,500 in tax credits and refunds.
In tax filing, there are credits and deductions that will aid come tax time. The IRS won’t let you take advantage of everything, so choose wisely. Credits are reductions in how much taxes you owe. Deductions reduce taxable income. Both help, but a credit will be much more noticeable to the bottom line. If a deduction precludes you from taking advantage of a credit, the credit is likely the better option.
You can deduct up to $4,000 spent on school-related expenses. This could produce up to $2,500 in tax credits and refunds. Qualified expenses may very well include tuition and enrollment fees, so check the IRS website for their list of eligible expenses.
However, the real help is going to be in the tax credit and there are two excellent credits you can use in 2015.
For students not being claimed as a dependent elsewhere, the American Opportunity Tax Credit (AOTC) is an excellent start in saving money. This also works for parents who are claiming the student as a dependent and paying for expenses. Many of those eligible will qualify for the maximum annual credit of $2,500 per student. The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels.
The Lifetime Learning Credit can be up to $2,000 per return. Since the AOTC can only be used for four years, many move on to this credit in the fifth year. The qualified expenses here include tuition, fees, course-related books and supplies.
In addition, any interest you pay for student loans could be tax deductible which is another way IRS could put more money in your pocket! So remember, excellent tax breaks await those who sign up now and start in December. At ORT, almost the entire tuition expense incurs upon starting the program which means tax breaks you can take advantage of now, and not to have to wait for your tax credit more than a whole year!
Contact one of our colleges in Los Angeles or Van Nuys. We offer many student services and financial aid packages that can help you find your dream job. LA ORT has programs from business and digital media to medical office management and pharmacy technology administration.