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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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