A tax break, that is. The tax code does provide a few benefits to help parents (and students) pay for college. However, taxpayers must meet certain requirements to qualify.
Credits: A tax credit reduces tax liability dollar for dollar. There are two credits available to eligible individuals paying college tuition for themselves and/or their dependents.
The Hope Scholarship Credit (up to $1,650 per student) is available for the first two years of undergraduate education. The Lifetime Learning Credit (up to $2,000 per family) is available for both undergraduate and graduate courses, as well as for courses taken at an eligible institution to acquire or maintain job skills. Only one of the credits may be claimed for a student’s expenses in any given year. Various other restrictions apply, including an income-based phaseout.
Student Loan Interest Deduction: If you are paying interest on a student loan, you may be able to write off up to $2,500 of interest each year. An income-based phaseout applies. Not sure how to make the most of these tax breaks? Ask us.
For more information, please contact Theresa M. Stewart, CPA, An Accountancy Corporation at 661-775-9534.