Posts Tagged ‘education’

Tax Benefits for Education and Training

Tuesday, August 16th, 2011

The exclusive purpose for the information which is provided from this website is to disseminate  information, and not to provide tax advice.

Classes have already resumed for almost all students throughout the nation.    All education is an investment for our future, and this “investment” will usually always provide an exceptional “rate of return” throughout your entire life.     

If you have incurred expenses for either your education, or someone else, the costs may qualify for either a tax deduction or tax credit.   However, the requirements change almost every year.  Always review the most current requirements to ensure that both you and your expenses qualify.  Additional tips include:

  •   Keep and maintain accurate supporting records – these include (but are not limited to) credit card statements, cancelled checks, bank statements, student loan lender reports, etc;
  •  Change of address updates – be sure to always update your current address, especially with lenders.  The lender will use the latest address on file at the end of the year to file the required reports with the IRS, and to provide you with a copy for your tax returns;
  •  Review the requirements from the current tax authority publication to determine which provisions provide the greatest tax benefit to you.  For example, the American Opportunity Credit has been extended for two additional years.  This tax credit has a maximum of $2,500.00/year for calendar years 2011 and 2012.  It is important to note that this tax credit is $500.00 more than the Lifetime Learning Credit annual limit of $2,000.00.  It is also 40% refundable which means that you may receive a tax refund even if you do not owe any income taxes.  There are income limits based on your “modified adjusted income” (as defined here http://www.irs.gov/businesses/small/article/0,,id=146823,00.html  ) 
  •  Review IRS publication 970,  “Tax Benefits for Education”,  in either Acrobat Reader format (http://www.irs.gov/pub/irs-pdf/p970.pdf) or HTML format (http://www.irs.gov/publications/p970/index.html);
  •  Other topics which are contained in this publication include:  “Scholarships, Fellowships, Grants, and Tuition Reductions”, “Student Loan Cancellations and Repayment Assistance”, “Coverdell Education Savings Accounts”, “Qualified Tuition Programs”, “Education Exception to Additional Tax on Early IRA Distributions”, “Education Savings Bond Program”, “Employer-Provided Educational Assistance”, and “Business Deductions for Work-Related Education”. 

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