Higher Education Tax Credits Can Help Pay for College

Aug 18, 2021 | Uncategorized

If you, your spouse or dependent child attends a college, university or trade school, or takes classes for an advanced degree, you know how expensive higher education can be. The good news is tax credits can help offset some of these costs.

There are two credits available that can help you save money on higher education: the American Opportunity Tax Credit and the Lifetime Learning Credit.

 

The American Opportunity Tax Credit:

  • Is worth a maximum of $2,500 per eligible student.
  • Applies only to the first four years at an eligible college or vocational school.
  • Is available for students pursuing a degree or other recognized education credential.
  • May be partially refundable — you could get up to $1,000 back.

The Lifetime Learning Credit:

  • Is worth up to $2,000 per tax return, per year, no matter how many students qualify.
  • Is available for all years of postsecondary education and for courses to acquire or improve job skills.
  • Is available for an unlimited number of tax years.

In order to claim either of these credits, you must receive a Form 1098-T from an eligible educational institution (though there are exceptions).

If you’re unsure whether you qualify, you can contact us for more details. We can help you determine your status for higher education tax credits. Contact us today at 706-632-7850 or email Jackie at jackie@premiercpaservices.com.

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Do You Need to Make Estimated Tax Payments?

If you expect to owe $1,000 or more when you file your 2021 tax return, you may need to make quarterly estimated tax payments in order to avoid an unexpected tax bill (and possibly a penalty). This is often the case if you own a small business, are self employed, or earn income not subject to withholding (i.e., by providing on-demand work, services or goods). You can check your withholding using the IRS’s Tax Withholding Estimator.

Keep in mind that the final two deadlines for paying 2021 estimated payments are September 15, 2021, and January 15, 2022. You can pay estimated taxes online from your bank account or by credit card, or by mailing a check or money order to the IRS.

If you’re not sure of your situation or need assistance, we’ll be happy to help. Just give us a call at 706-632-7850.

Update Business Information with the IRS

Have you made a change to your business address or responsible party information? The IRS requires you to update your account within 60 days of any change by filing Form 8822-B, Change of Address or Responsible Party ­­– Business. Many businesses forget to do this, making the data outdated or incorrect. Updating applies to businesses, partnerships, trusts and estates, charities and other entities that have EINs (Employer Identification Numbers).

EINs are used for tax administration purposes. If you close your business or stop using your EIN, you should close your IRS tax account by following the steps outlined here.

Video Tax Tip

Check out this IRS video tax tip: Get an Identity Protection PIN

The information provided here by Premier CPA Services PC is for general information only. It does not constitute legal, accounting, tax or other professional advice or services, and is presented without any representation or warranty as to the accuracy or completeness of the information. Please contact us for information as it relates to your circumstances.
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