You can still get tax benefits for expenses of higher education
If you or your family members attending or planning to attend post-secondary school in 2013, you can rely on tax credits for education for you help defray the cost.
American Opportunity Credit (formerly Hope credit)
A tax benefit is not only extended, it has also been improved. The Hope credit was temporarily replaced by the American Opportunity Tax Credit in 09. It was to expire in 2012, but is now extended until 2017.
The American opportunity credit provides a credit for high grades that taxpayers have received the hope credit.
on American Opportunity credit essentially pays up to the first tranche of $ 00 you spend on tuition, fees, books, supplies and equipment by giving you a credit for up to 100% of that amount.
If you qualify, it also gives you 25% of the next $ 2,000 in credit for a total credit of up to $ 2,500.
Unlike the old Hope credit, the American Opportunity credit is good for four years of undergraduate study.
Remember, this credit is non-refundable 100%
A non-refundable credit can not reduce your tax for the year to less than zero. However, because this credit is partially refundable, you may be able to receive up to $ 1,000 of credit (40% of the limit) as a refund even if you do not have the income tax.
The student (you, your spouse or your dependent) must be enrolled halftime least in a program leading to a degree for you to take this credit.
The credit phases at higher levels of income.
Lifetime Learning Credit
The lifetime learning credit provides a tax credit equal to 20% of tuition and certain related expenses up to $ 10,000. The maximum credit is $ 2,000.
This credit also phases at higher levels of income.
higher deduction for tuition fees
The deduction for tuition and fees has been extended until 2013. This may allow you to reduce your taxable income by as much as $ 4,000 . He is regarded as an adjustment to income, meaning that you can take this deduction even if you do not itemize your deductions.
You can not take this deduction if you are married filing separately, or if your parent or someone else can claim you as a dependent on their return. The deduction phases out at higher incomes.
deduction for interest on student loans
If you pay interest on student loans, you may be able to deduct the interest, whether or not you itemized deductions. You claimed as an adjustment to income, not an itemized deduction. By reducing your adjusted gross income, the deduction for student loan interest can help you benefit from other tax benefits as well.
The American Taxpayer Relief Act of 2012 repealed definitely the old five-year limit for the deduction of student loan interest. This means you can deduct student loan interest for as long it takes you to pay it back.
You can deduct up to $ 2,500 in student loan interest. If you have a modified adjusted gross income of $ 60,000 or more ($ 125,000 if filing jointly), the amount you can deduct is beginning to be eliminated. You can not take this deduction if you are married and file separately.
What profit tax do I use first?
The credits are almost always a better deal than deductions. Try the American Opportunity Credit first. If you are not eligible for it, the Lifetime Learning credit is the best thing.
If you can not take credit, the next choice is the higher deduction for education expenses.
Do I get a tax benefit for education expenses I pay for my children?
you can usually take the credit or the deduction for eligible expenses for yourself, your spouse or a dependent you claim on your tax return.
for student loan interest, you can deduct the interest on a loan you took for eligible tuition for your spouse, or a person who was your dependent when you took the ready.
Can I take? the American Opportunity Credit and the Lifetime Learning Credit in the same year
You can take two credits in the same year - but not for the same student. For example, if you have been spending on education, you can take either a credit or the other but not both.
If you and your spouse were in education spending, however, one of you could take advantage of the American opportunity credit. Your spouse may still take the learning credit for life if he or she qualifies
Do you think the average person can graduate from a college without student loans
Photo credit:.? Justin in SD via photopin cc
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