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Tax Benefits of Education. Circular 230 Disclaimer

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Tax benefits of education

Tax Benefits of Education

Circular 230 Disclaimer

Any tax advice contained in the body of this presentation was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.


Education expenses
Education Expenses

Included

  • Tuition

  • Fees

  • Required Books

  • Required Supplies

Excluded

  • Room

  • Board

  • Travel

  • Personal Expenses


Tuition deduction
Tuition Deduction

  • Income Phase-out $65,000-$80,000 and $130,000-$160,000

  • Unlimited Years and no degree requirement

  • Adjustment $1/$1 up to $4,000


Lifetime learning credit
Lifetime Learning Credit

  • Income Phase-out $51,000-$61,000 and $102,000-$122,000

  • Unlimited Years and no degree requirement

  • .20/$1 up to $10,000

  • $2,000 Nonrefundable


American opportunity credit
American Opportunity Credit

  • Income Phase-out $80,000-$90,000 and $160,000-$180,000

  • First Four Years Only and must be Pursuing a Degree

  • $1/$1 up to $2,000 then .25/$1 for next $2,000

  • $1,500 Nonrefundable, $1,000 Refundable


Single parent with 2 children
Single Parent with 2 Children

Total Income$35,000

Adjusted Gross Income$35,000

Taxable Income$15,400

Total Tax $1,703

Total Payments $2,828

Refund $1,126


Tuition deduction1
Tuition Deduction

Total Income$35,000

Tuition Deduction $4,000

Adjusted Gross Income$31,000

Taxable Income$11,400

Total Tax $1,140

Total Payments $2,828

Refund $1,688

Tax Benefit:

$563


Lifetime learning credit1
Lifetime Learning Credit

Total Income$35,000

Adjusted Gross Income$35,000

Taxable Income$15,400

Non Refundable Credit $1,703

Total Tax $0

Total Payments $2,828

Refund $2,828

Tax Benefit:

$1,703


American opportunity credit1
American Opportunity Credit

Total Income$35,000

Adjusted Gross Income$35,000

Taxable Income$15,400

Non Refundable Credit $1,703

Total Tax $0

Refundable Credit $797

Total Payments $3,625

Refund $3,625

Tax Benefit:

$2,500


Comparison
Comparison

  • Deduction – Refund $1,688

  • Deduction – Benefit $563

  • LLC – Refund$2,828

  • LLC – Benefit$1,703

  • AOC – Refund$3,625

  • AOC – Benefit $2,500


Education expenses1
Education Expenses

Included

  • Tuition

  • Fees

  • Required Books

  • Required Supplies

Excluded

  • Personal Expenses

  • Travel

  • Room

  • Board

  • Room and Board

  • Travel


Other tax benefits
Other Tax Benefits

Prepay (Save)

  • Qualified Tuition Programs (529)

  • Coverdell Education Savings Account

    Pay

  • Penalty Free IRA Distributions

  • Tax-Free Savings Bond Redemptions

    Repay

  • Tax-Free Student Loan Repayment Assistance

  • Student Loan Interest Deduction

    Don’t Pay

  • Tax-Free Student Loan Cancelation

  • Tax-Free Scholarships and Grants

  • Tax-Free Employer Assistance


Ma state tax provisions
MA State Tax Provisions

Tuition Deduction

Exceeds 25% of AGI

Undergraduate Only

Tuition and Fees Only

Student Loan Interest

Undergraduate Only

No Limit


Key documents
Key Documents

1098-T (Tuition Statement)

1098-E (Student Loan Interest)

Copy of Bill

Copy of College’s “Budget”


Resources
Resources

IRS for College Students

IRS Free File Options

MA DOR Education Deductions

MA DOR WebFile (Free)



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