How to Reduce Higher Education Costs with Tax Credits

Sep 25, 2020 | Personal, Tax Season

If you, your spouse or your dependent child takes college classes — whether online or in-person, part-time or full-time — you may be able to offset some of the costs with tax credits. These credits reduce the amount of tax you owe. And if the credit reduces your tax to less than zero, you could even receive a refund.

Two Education Credits Available

Two different higher education tax credits are available to help you save money:

American Opportunity Tax Credit

  • Worth a maximum benefit of up to $2,500 per eligible student.
  • Applies to the first four years at an eligible college or vocational school.
  • For students pursuing a degree or other recognized education credential.
  • Partially refundable (get up to $1,000 back).

Lifetime Learning Credit

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

To claim the credit(s), you’ll need to file Form 8863: Education Credits along with your federal income tax return. And you’ll need a copy of Form 1098-T from your educational institution.

We’ll be happy to answer any questions you might have, and help you determine your eligibility for the credits.

National Coffee Day Is September 29th

Did you know? Coffee drinkers consume more than 2.25 billion cups of coffee each day! Coffee beans are among the most valuable export crops, with small farms producing about 70% of the world’s coffee.

Per the nationaltoday.com website: If it weren’t for the Boston Tea Party in 1773, Americans may never have swapped tea for coffee. When the colonies revolted against King George III’s hefty tea tax, tea was out and coffee was in. Things really started to percolate in the mid 1800s when brothers John and Charles Arbuckle started selling coffee to cowboys in the American West. James Folger successfully introduced coffee to gold miners in California. Upon returning to San Francisco in 1865, Folger became a full partner of The Pioneer Steam Coffee and Spice Mills — which eventually became the J.A. Folger & Co. in 1872.

On this National Coffee Day, visit your favorite coffee shop for a special deal:

Dunkin’ Donuts: Free medium hot or iced coffee with any purchase, limited to one per order.

McDonald’s: Use the McDonald’s app to get a premium roast or iced coffee for $0.99.

Some additional freebies and offers are listed in this article.

Make Your Appointment

It’s time to make your year-end tax planning appointment. Choose an in-person meeting (limited availability), or a Zoom or phone meeting. Please call  706-632-7850 or email Amber to set up a date.

MONEY BRIEF #1

The IRS will mail letters later this month to about 9 million Americans who typically do not file federal income tax returns, but who may be eligible for (and have not yet claimed) an Economic Impact Payment. The IRS urges folks to register at irs.gov by October 15 so they can receive their payment by the end of the year: Up to $1,200 for individuals and $2,400 for married couples, plus up to an additional $500 for qualifying children who were under age 17 at the end of 2019.

MONEY BRIEF #2

Cash transactions of more than $10,000 must be reported to the IRS. This includes both U.S. and foreign coins and currency received:

  • In one lump sum.
  • In two or more related payments within 24 hours.
  • As part of a single transaction within 12 months.
  • As part of two or more related transactions within 12 months.

Cash payments are reported by filing Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business within 15 days after the cash is received. Filing electronically is encouraged. To e-file, a business has to have an account with the Financial Crimes Enforcement Network’s BSA E-Filing System. To set up an account, call the BSA E-Filing Help Desk at 866-346-9478 or email bsaefilinghelp@fincen.gov.

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.