The tax filing deadline is creeping upon us. If you’ve made student loan payments, make sure you claim those credits and deductions for which you qualify. Each one could mean a reduction in the amount owed or even a tax refund!
For those enrolled in school during the last tax year, there are a few credits you might take. The Lifetime Learning Credit is available to you, your spouse, or dependents if enrolled at an eligible educational institution and were responsible for paying college expenses. The credit is for a 20% credit for up to $2,000 on a $10,000 in tuition expenses. This credit may drop your tax to a zero balance, but any leftover credit is not refunded. An exciting requirement is that you don’t have to be in undergraduate school to receive the credit and may have only taken one course to qualify.
The American Opportunity credit allows for a credit of up to $2,500 on the first $4,000 of qualifying undergraduate college education expenses. There is a phase-out range based on the total amount of income, which you can review here. The credit is currently only available for the years 2009-2017, so make sure you use it before you lose it! Further, up to 40% of the credit is refundable, which means if you have a zero balance, then you may receive some of this money in a tax refund!
There are two deductions which you may be able to take advantage of whether you’re in school or out. The first is a deduction for up to $2,500 in qualified interest payments made during the tax year. The second deduction is for up to $4,000 in qualified tuition and fee payments made during the tax year for you, your spouse, or dependents. Both of these deductions are subtracted from your reported income, which can change how the amount you owe is calculated.
Requirements for the credits and deductions must be met, so make sure you read the fine print to avoid facing issues with your filings.
Until Next Time,
Jenny L. Maxey
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