Your Taxes: An Alternative Education tax Credit



Our yearly tax returns can be the key to opening doors to new sources of financial support.  In connection with the last blog, we are discussing Tax Credits related to forms of higher education, like colleges, universities, and technical or trade schools.  We will now focus on the Lifetime Learning Credit and its requirements. 

There is no class time requirement for the credit.  The student could attend classes on a less than full-time basis and still qualify.  However, the classes must be part of a Bachelor's or Master's degree program or related to maintaining or improving job skills.  Only tuition and fees directly related to enrolling or attending these classes are qualifying expenses.  The lifetime Learning Credit is unique in that it is not refundable.  It provides no benefit for those who owe no tax.  The maximum credit is $2000 per Tax Return, no matter the number of students.  Income limits play a large role in this tax credit as well.  The Adjusted Gross Income needed in order to begin to qualify must be below $65,000 for single filers and $130,000 for married joint filers.  Full credit is only available for single taxpayers whose income is less than $55,000 or married couples making under $110,000. 

Those who qualify for these credits we have discussed can benefit from them all year by having a smaller amount of tax withheld from their paychecks.  Other education assistance to consider includes:  Scholarships and Grants.  If used to pay for tuition, enrollment fees, books and course materials, that money is normally tax free.  Interest from student loans can be deducted up to $2,500 per year.  There are many options available to support individuals and families who plan on continuing their formal education.  What do you think?

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