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Federal Education Tax Benefits Eligibility

Federal Education Tax Benefits Eligibility

Federal students can claim tax credits and deductions for education. In addition, you may need to file early taxes to enjoy education financial aid. The government has enacted different tax benefits with different requirements. You can benefit from the many options as there are simple ways to become eligible. 

Regarding taxes and deductions, here are the different Federal Education tax benefits and their requirements.  

Education Benefits and Your Tax Return

Federal education tax benefits are available to single and married individuals filing joint taxes. Sadly, married couples filing separate taxes cannot benefit from the program. In addition, you enjoy the benefits if you are in college or have a child in college. The privilege will offset some costs and may reduce taxable income and qualify you for tax deductions. In addition, you can claim tax credits reducing the amount paid in taxes.

The American Opportunity Tax Credit

The 2009 tax year brought along the American Opportunity Tax Credit. The program reduces tuition fees, educational books, supplies, and Federal education equipment resulting in lower taxable income. 

In addition, the IRS may allow you to claim the tax credit and receive a check even without owing income tax. But qualification is a factor of your income, education expenses, and the number of eligible students in your household. 

Lifetime Learning Tax Credit

This credit offers up to $2,000 on education expenses. In addition, you can keep claiming this credit if you're a qualified student. However, there is an income limitation of $69,000 for single and HOH and $138,000 for married couples using joint tax filing. 

Remember that you can't claim the American Opportunity and Lifetime Learning tax credits at the same time or year. Plus, you can't enjoy the benefits if you use a 529 account to pay bills. But you can enjoy a portion from other sources you use in paying. 

Tuition and Fees Tax Deduction

You can benefit from up to $4,000 using tuition and fees tax deductions. This opportunity is open to people not qualified for any tax credits; consider it an adjustment income. And you can use any filing method, itemization or standard, through Form 1040 Schedule A. 

Furthermore, the window is open for individuals that earn $80 000 or less as gross income, double the amount ($160,000) for married couples filing jointly.

However, you can only remove tuition, fees, books, supplies, and equipment expenses, including certain grants and scholarships for you and any household member, with your dependents. In addition, you can only deduct if you're a student taking one or more courses in an eligible Federal educational institute. Unfortunately, you can either take education credit or the tuition and fees in a tax year. Still, you can enjoy both by taking each for different students. You can't make the deduction under any other provision, like a business expense. If you're married, filing separately, or someone is claiming you as dependent on their tax return, the window is shut to you. Forward your Tuition and Fees Deduction on Form 8917 boldly written Tuition and Fees Deduction.  

The 1098-T Statement

Your school will send you a 1098-T statement if you qualify for the benefits. The IRS mandates Federal institutions to notify their students with the form by January 31 each tax year. Some schools use the mailing method, while others may go electronically. The IRS expects you to save the document if you are claiming yourself or hand it over to who's is claiming you on their tax return. 

However, some schools may title theirs as tuition and fees, and the form does not care about your course-related books, equipment, or supplies expenses. You haven't lost the credit yet; you can summarize these expenses and report them on your tax return.



Pat Raskob
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