4 Tax Help For Higher Education

Acquiring a post-secondary education has been could be major objectives for a lot students. Parents would like to make sure that their children can get the proper education. Education gives a lot of opportunities for students and families. But attending college can be very expensive so most people cannot really afford to go. So as much as possible, families and students resort to saving money, getting scholarships, obtaining grants or any form of financial assistance they can get. As an example, there are accounting scholarship offered if you are an accounting student needing help with your education.

Also, the government is cognizant of this big expense so they have provided various tax shelter to people attending college. When it comes to taxes, you will need to get as much tax help when it comes to filing your taxes.

Below are the Most Common College Related Tax Benefits

American Opportunity Credit

This tax credit has been championed by President Obama as a means to assist low to middle income families. This credit is available for students who are attending the first four years of post-secondary institution. The amount of the credit is up to $2,500 for qualified expenses paid at a qualified institution. The student must be enrolled at least half-time of a normal academic load for at least one academic period in a program leading to a certificate,degree or other recognized educational credential. For most people, this credit gives the most tax benefit. However, this credit is only available through tax year 2012, unless the government extends the tax help again, and will revert to the old Hope Credit.

Lifetime Learning Credit

You can receive an amount equal to $2,000 of credit per tax return (not per student) for qualifying expenses used for post-secondary education by you, your spouse and your dependents. With this credit, there is no restriction on the number of years that you can claim this. So basically, you can claim this even if the student is obtaining a master’s degree, doctorate, or just taking college courses in order to improve skills. Typically, you would only file this if you are no longer eligible for the American Opportunity credit, or if the tuition and fees deduction gives less tax benefit to you.

Tuition and Fees Deduction

Tuition and Fees deduction can reduced your tax return directly without filing an itemize return or Schedule A. Students don’t need to be enrolled half-time or full-time, so even taking one course can qualify you for this deduction. You can reduce your taxes by as much as $4,000 of deduction for qualifying expenses for a student who is in college institution. You usually cannot file this college tax deduction if you are already claiming the American Opportunity Credit or the Lifetime Learning Credit for the same student. In addition, this credit is usually taken if you do not qualify on the other two college tax credits because your adjustments to gross income is bigger than the income restrictions. Tax year 2011 may be the last year that this deduction will be offered.

Student Loan Interest Deduction

You can deduct up to $2,500 of paid student loan interest used for higher education if your adjusted gross income meet a certain limit. There is no need to file an itemized return to benefit from this. But, this deduction is {gradually phased out as your income increases. Also, interest is deductible only for the first five years of repayment. This tax incentive may change after the year 2012.