I’ve seen tears from a man that saved hundreds of dollars in taxes by deducting his student loan interest payments. If you’re putting your time, energy and dollars towards improving yourself, then you deserve a break on your income taxes. Even the IRS says so, and they don’t hand out cash very easily.
You can save a few tax dollars with these credits and deductions:
American Opportunity Credit (AOTC)
Lifetime Learning Credit (LLC)
Tuition and Fees deduction
Student loan interest deduction
Tax incentives are there to encourage smart spending – like on tuition, books and school expenses. But how do you know if you should go for the deduction or the credit, since you can’t do both? How do GET accounts or Coverdell ESAs get treated? Should you claim your college-age daughter as a dependent, or should she be filing a return on her own?
The numbers get complicated, so best to check with a tax professional to make sure you are maximizing the tax savings. A few simple things:
NO DOUBLE-DIPPING!! withdrawals from 529 plans can’t be deducted from taxable income. However, you and your dependent child may be filing separate returns, and that can work to your advantage when deciding on which approach to take.
INCOME LIMITS If you’re filing jointly with a taxable income of $180,000 ($90K for single folks) you can stop reading right here. No education credits for you! Things start getting phased out at the $130K level so if your AGI is below that number, no worries.
Here is a list of all the education-related tax incentives the IRS has to offer:
American Opportunity Credit (AOC) – Generally this is your best bet. A $2,500 credit on your tax bill for any tuition, books or fees paid out of pocket for an undergraduate student that is enrolled full-time.
Lifetime Learning Credit (LLC) – taking a creative writing class, or paying makerspace fees? Working your way through an master’s program, or a webinar workshop? The IRS will give you up to $2,000 back on your tax bill in return.
Student loans – Collectively, Americans owe more on student loans than they do credit cards. Even Social Security checks are being garnished for student loan payments! At least those interest payments are deductible.
IRA plans – early withdrawal penalties don’t apply if you spend the money on college.
Tuition and Fees deduction – if your AGI is too high to qualify for the LLC, you can still avoid paying taxes on those dollars with this deduction.
Spot on with this write-up, I seriously believe this amazing site needs a lot more attention. I’ll probably be back again to see more, thanks for the information!
I’m not that much of a online reader to be honest but your sites really
nice, keep it up! I’ll go ahead and bookmark your website to come back later on. Cheers
Great information. Lucky me I came across your site by accident (stumbleupon).
I’ve saved as a favorite for later!
Howdy! This blog post could not be written any better!
Looking through this post reminds me of my previous roommate!
He always kept preaching about this. I will send this post to him.
Fairly certain he will have a very good read.
Thank you for sharing!
It’s hard to find educated people on this subject, but you sound like you know what you’re talking
about! Thanks
I am genuinely delighted to read this website
posts which consists of plenty of valuable information, thanks for providing such data.
Hey there! I’ve been reading your site for a while
now and finally got the courage to go ahead and give you a shout out from Dallas
Tx! Just wanted to mention keep up the fantastic work!
Helpful info. Lucky me I discovered your web site accidentally, and I am shocked why this twist of fate
didn’t happened earlier! I bookmarked it.
May I simply say what a comfort to uncover somebody that actually understands what theyre talking about on the internet. You definitely realize how to bring an issue to light and make it important. A lot more people ought to check this out and understand this side of the story. I cant believe you are not more popular since you definitely possess the gift.