It is that time of year when back to school is on all our minds. Where did the summer go? Just when you are finally in a summer routine, it is over and now it is time to think about buying school clothes and supplies, meeting teachers, arranging school schedules and all the other things that go into educating both our children and ourselves.
In this blog, I would like to touch on the education credits that are available for higher education as well as things that can be deducted at the grammar, Jr High, and High school levels. Let’s start with higher education credits. These credits are for college. There are 2 credits that are still in effect.
- American Opportunity Credit. This credit for qualified education expenses paid for an eligible student for the first four years of higher education. You can get a maximum annual credit of $2,500 per eligible student. If the credit brings the amount of tax you owe to zero, you can have 40 percent of any remaining amount of the credit (up to $1,000) refunded to you.
- Lifetime Learning Credit. This is for qualified tuition and related expenses paid for eligible students enrolled in an eligible educational institution. This credit can help pay for undergraduate, graduate and professional degree courses–including courses to acquire or improve job skills. There is no limit on the number of years you can claim the credit. It is worth up to $2,000 per tax return.
Both of these credits are for tuition, books, class fees and special equipment used in certain degrees that is not covered by a grant or scholarship. They do not include housing, food, or travel while away at school.
What about your children that are not yet in college? Public schools, charter schools and some private schools are considered Non-profit organizations. Often, parents are asked to donate money as well as supplies to these schools. If you donate money or buy supplies, such as paper, art supplies, etc., you can deduct them on the itemized portion of your tax return. Also, joining the PTA is deductible. Room mothers, who provide supplies and pay for parties, can deduct those expenses as well.
Next time you buy something that is school related, think about whether it could be considered a tax deduction. If you are not sure, keep the receipt and ask your tax preparer.
For any additional questions about these tax credits, contact us at Soulence.com.