Check out the 2015-2016 Tax Facts section for tables for rates and deductions.
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Those of you with college-attending children have no-doubt enjoyed the substantial tax credits and write-offs associated with your tuition and education expenses. It helps, at least in part, to mitigate the super high cost of education nowadays.
Here are two quick-look charts, one about tax credits and one about tax deductions, to help you to prepare for your taxes.
Education Tax Credits
Note: No matter which credit you are seeking, you MUST produce a Form 1098-T from the educational institution in order to qualify.
| Info Category | American Opportunity Credit | Lifetime Learning Credit |
|---|---|---|
| Tax Benefit | 40% refundable (added to refund)* 60% nonrefundable (subtracted from tax liability) |
Nonrefundable tax credit |
| 2015 Annual Limits | Credit up to $2500 per student... must have spent $4000 per student to receive full credit | Credit up to $2000 per return.(20% of up to $10,000 in expenses) |
| Qualified Expenses | Tuition, fees, books supplies, and equipment (must be required by institution) | Tuition, fees, books supplies, and equipment (must be required by institution) |
| Student Must Be... | Taxpayer, spouse or dependent | Taxpayer, spouse or dependent |
| Qualifying Education | First four years of undergraduate | Undergraduate and Graduate |
| Other Rules and Requirements | Must be enrolled at least half-time in a degree program | Available for any college course, degree or non-degree, from a credited institution |
| Income Phase Outs: 2015 Married/Joint | $160,000 - $180,000 | $107,000 - $127,000 |
| Single/HOH | $80,000 - $90,000 | $53,000 - $63,000 |
| Married/Sep | Do not qualify | Do not qualify |
*If taxpayer is under age 24, refundable portion of credit is usually not allowed.
The following IRS link answers many questions about these two credits: http://www.irs.gov/uac/American-Opportunity-Tax-Credit
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Education Tax Deductions
| Info Category | Savings Bond Interest Exclusion | Student Loan Interest Deduction | Tuition and Fees Deduction |
|---|---|---|---|
| Tax Benefit | Tax-Free Interest | Above- the -line tax deduction | Above- the -line tax deduction |
| 2015 Annual Limits |
Amount of qualifying expenses | Up to $2500 of interest paid on education loan | Up to $4000 of qualifying expenses paid |
| Qualified Expenses | Tuitions and fees; Contributions to QTPs and ESAs | Tuition, fees, books supplies, equipment, room/board, transportation, other necessary expenses) | Tuition and fees; books, supplies, and equipment |
| Student Must Be... |
Taxpayer, spouse or dependent | Taxpayer, spouse or dependent | Taxpayer, spouse or dependent |
| Qualifying Education | Undergraduate and Graduate | Undergraduate and Graduate | Undergraduate and Graduate |
| Other Rules and Requirements | Series EE Bonds; Bond owner must be 24 yrs old before issue date | Payer legally obligated to repay; loan must be incurred for expenses of student enrolled at least 1/2 time | Not allowed if an education credit is claimed, or expenses are used under another provision |
| Income Phase Outs : 2015 Married / Joint |
$112,050 - $142,050 | $125,000 - $155,000 | $130,000 - $160,000 |
| Single/HOH | $74,700 - $89,000 | $60,000 - $75,000 | $65,000 - $80,000 |
| Married/Sep | Do not qualify | Do not qualify | Do not qualify |
| Documentation Needed | Form 1099-INT; Cash-out paperwork from bank showing total proceeds vs. interest | Form 1098-E | Form 1098-T; Statement of paid amts from educ. institution |
There are ways to "mix and match" these credits. Bring ALL your information to your appointment so that I can figure out the most favorable combination for you.
Other Education Tax Benefits are listed in the following IRS website: http://www.irs.gov/uac/Tax-Benefits-for-Education:-Information-Center
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