If you paid for college it can mean tax savings on your federal tax return. There are two education credits that can help you with the cost of higher education. These credits include the American Opportunity Credit and the Lifetime Learning Credit. Here are some important facts you should know about these education tax credits.
The American Opportunity Tax Credit allows you to claim up to $2,500 per eligible student. Some tips to consider under this tax credit:
- The credit only applies to the first four years at an eligible educational institution.
- It reduces the amount of tax you owe. If the credit reduces your tax to less than zero, you may receive up to $1,000 as a refund.
- It is available for students earning a degree or other recognized credentials.
- The credit applies to students going to school at least half-time for at least one academic period that started during the tax year.
- Costs that apply to the credit include the cost of tuition, books, required fees and supplies.
The Lifetime Learning Credit is limited to $2,000 per tax return, per year. Some tips to consider under this tax credit:
- This credit is available for an unlimited number of years as it applies to all years of higher education at an eligible educational institution. This includes classes for learning or improving job skills.
- The credit is limited to the amount of your taxes.
- Costs that apply to the credit include cost of tuition, required fees, books, supplies and equipment.
What does your tax return say about your financial situation? The fact is, the paperwork you file each year offers excellent information about how you are managing your money—and about areas where it might be wise to make changes in your financial habits. If you have questions about your financial situation, remember that we can help. Our firm is made up of highly qualified and educated professionals who work with clients like you all year long, serving as trusted business advisors.
So whether you are concerned about budgeting; saving for college, retirement or another goal; understanding your investments; cutting your tax bite; starting a business; or managing your debt, you can turn to us for objective answers to all your tax and financial questions.
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The Internal Revenue Service recently issued the 2017 optional standard mileage rates to be used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
As of January 1, 2017, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) are:
- 53.5 cents per mile for business miles driven (54 cents for 2016)
- 14 cents per mile driven in service of charitable organizations (14 cents for 2016)
- 17 cents per mile driven for medical or moving purposes (19 cents for 2016)
It is important to remember that a taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. For more information, please contact one of our professionals today.