Higher Education Tax Credits and Deductions

Tuition Tax Credits &Deductions An introduction to higher education tax credits and deductions Don’t go to College without us….

Tuition Tax Credits & DeductionsThis presentation is meant as an introduction tohigher education tax credits and deductionslisted in Publication 970 of the 2010 tax code.This presentation should not be used orconstrued as tax advice.

College is Expensive…Average published Cost of Attendance*(tuition, room and board)charges:• Public 4-Year In-State: $16,140• Public 4-Year Out-of-State: $28,130• Private Nonprofit 4-year: $36,993 *Source: 2010 College Board data

Did You Know about these 2010 Tax Year Tax Deductions and Credits? American Opportunity Credit Lifetime Learning Credit Tuition and Fees Deduction

American Opportunity CreditThe American Opportunity Tax Credit modifies the Hope Credit inmultiple ways, including:• The maximum amount of the credit is increased to $2,500.00.• 40% of credit may be refundable; the rest is nonrefundable.• The credit can now be claimed for the first 4 years of highereducation.Notes on Availability:The full credit is available to individuals whose modified adjusted grossincome (MAGI) is $80,000 or less, or $160,000 or less for married couplesfiling a joint return. The credit is phased out for taxpayers with MAGIbetween $80,000-$90,000/ $160,000-$180,000. Those with MAGI abovethese amounts cannot claim the American Opportunity Credit.Read More Here.

Lifetime Learning Credit What is the tax benefit of the lifetime learning credit? For the tax year, you may be able to claim a lifetime learning credit of up to $2,000 for qualified education expenses paid for all eligible students. Unlike the Hope Credit, there is no limit on the number of years the lifetime learning credit can be claimed for each student.Maximum credit Limit on modified Refundable or adjusted gross income nonrefundable (MAGI) •Up to $2,000 credit •$120,000 if married filling •Nonrefundable — per return jointly credit limited to •$60,000 if single, head of the amount of tax household, or qualifying you must pay on widow(er) your taxable •Benefits phased out income between $50,000 and $60,000 / $100,000 and $120,000. Read More Here.

Tuition and Fees Deduction What is the tax benefit of the tuition and fees deduction? The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000.Where is the deduction taken?As an adjustment to income on Form 1040 or Form 1040A.For whom must the expenses be paid?A student enrolled in an eligible educational institution who is either:you, your spouse, or your dependent for whom you claim an exemption.What tuition and fees are deductible?Tuition and fees required for enrollment or attendance at an eligiblepostsecondary educational institution, but not including personal, living, orfamily expenses, such as room and board.Limit on Modified Adjusted Gross Income for Claim Purposes?Those with MAGI in excess of $160,000 if married filing a joint returnor $80,000 if single, head of household, or qualifying widow(er) are noteligible to claim the tuition and fees deduction. Read More Here.

Other Tax Benefits for EducationMany other tax benefits are listed in Publication 970 ofthe 2010 Tax Code:The following chapters are also listed in Publication 970:•Scholarships, Fellowships, Grants, and Tuition Reductions•Student Loan Interest Deduction•Coverdell Education Savings Account (ESA)•Qualified Tuition Program (QTP)•Education Exception to Additional Tax on Early IRA Distributions•Education Savings Bond Program•Employer-Provided Educational Assistance•Business Deduction for Work-Related Education Publication 970 also includes information on free tax help. You can view that section of the publication by clicking here.

You have questions, we have answers!Join College Parents of America and get more tips and advice on: How to get ready to fill out your FAFSA form; How to make sense of your college student’s financial aid package; How to protect your family’s college investment and much more…For more information, please contact us the following ways: www.CollegeParents.org 888-761-6702

Higher Education Tax Credits and Deductions

by College Parents of America on Feb 02, 2011

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Higher Education Tax Credits and Deductions Presentation Transcript