August 24, 2016

Back-to-College Tax Tips – Financially Simple

“Back-to-College Tax Tips”If you, your spouse, or a dependent is heading off to college, there are some important tax-saving tips you should know about. Here’s what the IRS says: Back-to-College Tax Tips You can claim only one type of education credit per student on your tax return each year. If you have multiple eligible students, you could claim a different credit for each student. To qualify, education expenses must be for tuition, fees, and “related expenses” for an eligible student. Expenses must be paid for attendance at eligible higher education institutions, including most colleges and universities. Ask the school whether they are an eligible institution or check the school’s accreditation status in the U.S. Department of Education’s Accreditation Database. The American Opportunity Tax Credit: The AOTC is worth up to $2,500 per year, per eligible student. You may claim this credit only for the first four years of higher education. 40% of the AOTC is refundable, which means if you are eligible, you can get up to $1,000 of the credit as a refund, even if you do not owe any taxes. The Lifetime Learning Credit: The LLC is worth up to $2,000 on your tax return. There is no […]