Tax Tips 2017: Education Tax Incentives

Education Tax Incentives

College can be stressful. But it can lead to some major tax benefits when it comes to tax season. There are misconceptions of what is deductible when it comes to school expenses. There are three categories to look at for you tax situation.

     1.       American Opportunity Tax Credit

  • This credit gives you $2,500 to deduct from your taxes owed. If it brings the amount you owe down to $0, then you are able to get a refund of 40% of the remainder up to $1,000.

    2.       The Lifetime Learning Credit

  • This credit is similar where you are able to deduct tuition and related expenses up to $2,000 per tax return. Unfortunately, this credit cannot lead to a refund like the previous credit.

    3.       Deduction for Tuition and Fees

  • If for some reason you do not qualify for the credits above, you are always able to deduct up to $4,000 of related expenses each year.

 

In addition, there are income and other eligibility requirements. Compare your three options

using this chart provided by the IRS https://www.eitc.irs.gov/Other-Refundable-Credits/educompchart

 

If you want to know if you qualify for these credits, give us a call at (714)-533-2600 to schedule a FREE consultation to make sure you are maximizing your deductions. 

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