Higher Education Tax Credits Can Help Pay for College

Higher Education Tax Credits Can Help Pay for College

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.

Premier CPA Services 10 year anniversary logo

May 31 was our 10-Year Anniversary! To celebrate, we will be offering some great giveaways to our clients and Facebook friends. Be sure to follow us and stay tuned!

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

How to Reduce Higher Education Costs with Tax Credits

How to Reduce Higher Education Costs with Tax Credits

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.