Education Tax Credits
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Income tax laws can be difficult to understand and are always changing. Make sure you are maximizing your deductions and that your records are audit proof.
Tax credits are available to persons who pay qualified higher education costs.
- Available for qualified tuition and selected related expenses of the taxpayer, the taxpayer’s spouse or a dependent of the taxpayer claimed on the taxpayer’s return.
- Qualified expenses paid by the student are considered to have been paid by the parent if the student is claimed as a dependent on the parent’s tax return.
- Not available to married taxpayers filing separate returns.
- Qualified expenses include tuition and fees required for the enrollment or attendance of a student at an eligible educational institution. Fees other than for tuition vary by the type of credit.
- An eligible institution is any accredited college, university, vocational school or other accredited post-secondary education institution.
- Qualified expenses do not include expenses for hobby courses that involve sports, games or hobbies, or any non-accredited course unless it is part of the student’s degree program. Personal expenses such as room and board, insurance, medical expense and transportation also do not qualify.
- Credits are subject to income phase outs based on your modified adjusted gross income.
The American Opportunity Credit is a temporary two-year expansion of the Hope credit. The maximum credit is $2,500 per student.
- Degree requirement. Student must be enrolled in a program that leads to a degree, certificate or other recognized educational credential.
- Work Load. Student must take at least one-half of the normal full-time work load for the student’s course of study for at least one academic period.
- No felony drug conviction. Student is free of any felony conviction for possessing or distributing a controlled substance.
- First four years of education. The student as of the beginning of the tax year, must not have completed the first four years of post secondary education. The tax credit can only be claimed for four tax years for any one student.
The Lifetime Learning Credit is a nonrefundable tax credit of 20% of up to $10,000 of qualified tuition and fees (but not room and board or books) paid during the tax year. The credit is per taxpayer, not per student.
- Both degree and non-degree courses eligible. Available for students acquiring or improving their job skills.
- Unlimited number of years.
The taxpayer should seek advice
Based on the taxpayer’s particular circumstances
From an independent tax advisor
Beucler Company CPA, Inc.
2503 Summit St.
Columbus, OH 43202
Internal Revenue Service Circular 230 Disclosure: As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any transaction or matter addressed herein.