March 31st, 2020

Help with college tuition.

Looking for some help paying that college tuition?

The American Opportunity Tax Credit provides taxpaying students potential assistance with the cost of attending college. The credit offers greater tax savings than a tuition deduction since it reduces the tax you owe on a dollar-for-dollar basis rather than just reducing the amount of income subject to tax. However, there are several requirements for eligibility.

Eligible students
An eligible student is a person who has not completed four years of schooling, enrolls in at least one academic semester during the applicable tax year and maintains at least half-time status in a program leading to a degree or other credential.

Qualified Expenses
As long as you’re paying the tuition and fees to an eligible educational institution then you can include the credit. When calculating the credit, you can include the amounts paid for books, supplies and equipment the student purchases that relate to the program of study.

Claiming the tax credit
Either the student or another taxpayer who claims the student as a dependent may take the credit on a personal tax return. You must complete the relevant sections of IRS Form 8863 and attach it to a personal income tax return to claim the credit. The credit begins to phase out for taxpayers over certain adjusted gross income thresholds.

Click here for more information.  Consult your tax advisor to see how this credit applies to your particular situation.

Category: College Bound

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