Back-to-School Tax Tips for Students and Parents

Here is a word from the Goodfellas at the IRS:

IRS Summertime Tax Tip 2013-19

Going to college can be a stressful time for students and parents. The IRS offers these tips about education tax benefits that can help offset some college costs and maybe relieve some of that stress.

• American Opportunity Tax Credit. This credit can be up to $2,500 per eligible student. The AOTC is available for the first four years of post secondary education. Forty percent of the credit is refundable. That means that you may be able to receive up to $1,000 of the credit as a refund, even if you don’t owe any taxes. Qualified expenses include tuition and fees, course related books, supplies and equipment. A recent law extended the AOTC through the end of Dec. 2017.

• Lifetime Learning Credit. With the LLC, you may be able to claim up to $2,000 for qualified education expenses on your federal tax return. There is no limit on the number of years you can claim this credit for an eligible student.

You can claim only one type of education credit per student on your federal tax return each year. If you pay college expenses for more than one student in the same year, you can claim credits on a per-student, per-year basis. For example, you can claim the AOTC for one student and the LLC for the other student.

You can use the IRS’s Interactive Tax Assistant tool to help determine if you’re eligible for these credits. The tool is available at IRS.gov.

• Student loan interest deduction. Other than home mortgage interest, you generally can’t deduct the interest you pay. However, you may be able to deduct interest you pay on a qualified student loan. The deduction can reduce your taxable income by up to $2,500. You don’t need to itemize deductions to claim it.

These education benefits are subject to income limitations and may be reduced or eliminated depending on your income.

For more information, visit the Tax Benefits for Education Information Center at IRS.gov. Also, check Publication 970, Tax Benefits for Education. The booklet’s also available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

IT'S COMING......

Confessions of a Mad Tax Accountant #4: Receiving CPE Offers

C - Continuing

P - Professional

E - Education

“The more I live, the more I learn. The more I learn, the more I realize, the less I know.”
― Michel Legrand

 

Education is in my blood. My father was a principal and my mom was a day care director. In fact, I moonlight as an adjunct professor at a local college. I'm a strong believer in the importance of Continuing Professional Education (CPE). As an Enrolled Agent, I must obtain 72 hours of CPE every three years. I have no problem with the 72 hour requirement. However, I do have a problem with the tons of email I receive from CPE providers. Who is selling my information? How did these companies get my email address? Most people get spam mail about an inheritance scam or Viagra pills but people like myself get spam about CPE!

 

Honestly, I probably only used three online CPE providers. I like to stick with companies that I already trust. I'm not saying that other companies are scam artists. I just don't want to be bother with all of these offers. I find myself always unsubscribing from a mailing list that I never signed up for in the first place! My advice would be to just stick with two CPE providers. Life is already too complex to deal with more than two CPE providers.

 

I won't offer any recommendations about which CPE provider to chose. I believe that your CPE provider should be chosen based on your personal preference. For example, I only use CPE providers who have websites that don't look like they are stuck in the 90s (or early 2000s). This is my personal preference and I'm not saying everyone should follow it.

 

If you are the one selling my information to CPE providers.....shame on you!

 

Next confession: Arrogance of Some (Not All) Old Accountants (30+ years)

 

Check out the new and improved The Tax Factor blog @ www.thetaxfactor.com

 

IT'S COMING.......