4 TAX CREDIT & DEDUCTIONS: BACK TO COLLEGE – Phoenix Tax Consultants

4 TAX CREDIT & DEDUCTIONS: BACK TO COLLEGE

4 TAX CREDIT & DEDUCTION OPTIONS TO KNOW BEFORE HEADING BACK TO COLLEGE

Posted on August 18, 2011

 

We like the IRS! They send out a weekly email blast with helpful links and resources that cover a wide range of topics. As your local tax specialist it’s our job to share information that we feel will benefit our clients and community.

Since it’s “back to school” and students are gearing up and applying for more loans we decided to share the College Tax Credits & Deductions from this week’s IRS newsletter. For the complete article visit:  www.irs.gov

“The Internal Revenue Service wants to remind college students, whether new or returning, or parents who are paying for educational expenses, to keep receipts and to be aware of some tax benefits that can help offset these college costs. Here are four tax credit and deduction options that can be taken advantage of:

  1. American Opportunity Credit – This credit has been extended for an additional two years – 2011 and 2012. The credit can be up to $2,500 per eligible student and is available for the first four years of post secondary education. Forty percent of this credit is refundable, which means that you may be able to receive up to $1,000, even if you owe no taxes. Not a bad deal!*
  2. Lifetime Learning Credit -You may be able to claim a Lifetime Learning Credit of up to $2,000 for qualified education expenses paid for a student enrolled in eligible educational institutions. There is no limit on the number of years you can claim the Lifetime Learning Credit for an eligible student.*
  3. Tuition and Fees Deduction – This deduction can reduce the amount of your income subject to tax by up to $4,000 for 2011 even if you do not itemize your deductions.*
  4. Student Loan Interest Deduction – You may be able to deduct interest paid on a student loan used for higher education during the year. It can reduce the amount of your income subject to tax by up to $2,500, even if you don’t itemize deductions.*

     *Check www.irs.gov for eligibility for each of these credits.

For each student, you can choose to claim only one of the credits in a single tax year. However, if you pay college expenses for two or more students in the same year, you can choose to take credits on a per-student, per-year basis.”
USEFUL LINKS:
Students check out this YouTube Video
Parents check out this YouTube Video
Tax Benefits for Education

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