Tax Breaks for the Students in Your Family
 | (NewsUSA) - College costs may have entered nosebleed territory, but at least Uncle Sam is there waving a hanky in the form of juicy tax credits and deductions for those smart enough to claim them.
If you've been footing those education bills, either for yourself or your child, the latest College Board statistics shouldn't be a shocker: In-state tuition and fees at four-year public colleges rose an average of 8.3 percent last year -- to $8,244 -- even as the economy sputtered. "That's a terrible upfront burden for many families," says Elaine Smith, master tax advisor at H&R Block (www.hrblock.com), the giant tax preparation firm. "But at least there are several breaks built into the tax code that could even mean the difference between whether you owe taxes or are due a refund." What breaks? Read on: * American Opportunity Tax Credit. This is the Gold Standard for those who qualify. Meaning, it's a dollar-for-dollar tax offset of up to $2,500, per student year, for up to four years of undergraduate education. "One of the best things about it is that up to $1,000 of the credit is 'refundable,'" notes Smith. "So you could wind up getting a refund for that amount if no taxes are otherwise due." Biggest cautions: You must be enrolled at least half-time in a degree program to claim it, and -- like all these breaks -- the benefit starts to phase out once you reach a certain adjusted gross income (AGI). * Lifetime Learning Credit. Eligibility standards for this one are broader, even if it's less generous than the AOTC. Pursuers of both college and graduate degrees -- as well as those taking classes to improve job skills -- potentially stand to benefit from a tax credit up to $2,000. Biggest caution: The credit can only be claimed once per tax return, regardless of the number of students taking courses. * Student-Loan Interest Deduction. If you're self-financing, congrats -- and skip this one. If not, we're talking up to $2,500 per year. Biggest caution: Only debt from graduate and undergraduate programs qualifies. * Tuition and Fees Deduction. There's a built-in caution to this $4,000 deduction: You can't claim it and the Lifetime Learning Credit for the same student, so do the math to see which works best. Of course, if the "M" word -- math -- scares you as much as the looming April 17 filing deadline, consult a professional like those at H&R Block, which offers in-person services at its retail offices nationwide as well as the only face-to-face online preparation through Block LiveSM. One last tip: For those wondering whether scholarship income awarded for room and board is tax-exempt, the answer, alas, is no. |
More Resources
Unable to open RSS Feed $XMLfilename with error HTTP ERROR: 404, exiting
More Taxes Information:
Related Articles
Furnishing Evidence in E-Tax Compliance
Self-assessment relies on taxpayers voluntarily meeting their tax obligations. This concept is recognised in all tax statutes, which sets out taxpayers' primary obligations, and clearly spells out that taxpayers are required to determine the amount of tax payable correctly and to pay it on time.
1031 Exchange Rules and Requirements
Following is a reproduction of the IRS's rules and requirements for 1031 tax deferred exchanges with regards to real property. If you have any questions regarding the sale of your real property or questions about what qualifies for a 1031 exchange or not, please consult your tax professional.
Hurricane Katrina - How To Use Your Business Loss To Get A Refund on 2004 Taxes
With the massive losses caused by Katrina, the economy of the Gulf Coast region is in extremely bad shape. Fortunately, there is a quirk in the tax code that can help you generate a large refund from your 2004 taxes.
Small Businesses Filing Amended Federal Tax Returns to Recover Money
Small Businesses Filing Amended Federal Tax Returns to Recover MoneyBy Darren Oliver April 15th may be gone but, but certainly not forgotten - especially if you, like millions of small businesses, unknowingly overpaid your federal taxes and can recover money by filing an amended return. According to the IRS tax code, you have three years from the filing date for the tax year in question to file an amended return.
Slash Tax when Buying a Business
When buying a business, how the "purchase price" is made up can affect what you pay in tax. The plan is to make as much of the price tax deductible for you and not the other party.
Need a Copy of Your Tax Return Information?
Taxpayers have two easy and convenient options for getting copies of their federal tax return information - tax return transcripts and tax account transcripts - by phone or by mail.A tax return transcript shows most line items from the tax return (Form 1040, 1040A or 1040EZ) as it was originally filed, including any accompanying forms and schedules.
Home Based Business Tax Deductions
Running a home based business reaps many wonderful tax deductions that other businesses some times may not claim. Unfortunately to many small business owners end up paying the government taxes every year because they are unaware or several small business deductions that are available.
What You Need To Know About Taxes If You're Getting Married
It may not be high on the list of wedding planning activities, but there are a few simple steps that can help keep tax issues from interrupting your newly wedded bliss. If you recently married, check out your new tax situation.
Access to E-records by Taxing Authorities: A Case for Pakistan (Part I)
Background issues of access to recordsTo assess the records at hosted remote retained out of the jurisdiction of Pakistan root many legal issues which are needed to be addressed. Hereinafter there is description of the emerging legal issue of access to e-records.
Tax Deductions - Mr. C.P.A. Can I Deduct a Pizza? You Too Can Deduct Your Fun By Using Tax Tips
Recently, I stumbled across a concept that could change your financial life. You can call it a paradigm shift or a new perspective or just a different way to look at things.
Tax Reform, My Way
We need real tax reform and we need it now. Previous attempts have been made at tax reform, but they have only provided band-aid solutions that have still left us with too many quirks, complication, and read tape.
Tax Tips - Which Tax Form Is Right For Me?
IRS Tax forms can be confusing.Am I a 1099 or a W-2.
IRS Lock-In Letters - What's An Employer To Do?
Employers often ask employees to designate the amount of tax withholdings for paychecks. Occasionally, employees will fail to withhold a sufficient amount in the eyes of the IRS.
Gambling Income and Expenses - Tax Requirements
Hit a big one? With more and more gambling establishments, keep in mind the IRS requires people to report all gambling winnings as income on their tax return.Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse and dog races and casinos.
Take Control of Your Taxes
As everyone in the U.S.
Another Tax Loophole
Just image, you are a small manufacturing company, business has been good, but yesterday you received a call from a customer who wants 50,000 widgets in 45 days. The customer is a large account and if you turn the business down, he may never call you again.
Small Business Tax Deduction - Write-Off Bad Debts
Practically every small business has receivables that it cannot obtain from clients. If your small business doesn't have any such receivables, consider yourself lucky.
How to Maximize Your Home Business Tax Deductions for 2005
Someone once said, 'the best way to calculate your taxes is?Honestly'. For 2005, add 'Smartly' to that and you'll get to keep more than you make.
10 Thoughts on Tax Offer in Compromise
Beware of advertisements that claim to settle tax debts for "pennies on the dollar". Check the Offer In Compromise requirements to see if it is right for you.
Donating Cars To Charity - New Tax Rules
On June 3, 2005, the IRS released guidance on charitable deductions for donated vehicles. The American Jobs Creation Act (AJCA) radically changed the amount of the deduction taxpayers can claim for their donated car.