Go Back To College And The IRS May Help Pay For It!
The introduction of the American Opportunity Tax Credit had been one of President Obama's major platforms since he started campaigning for president back in 2007. The only problem with it is this credit is only good for the first two years of a student's education. That's great if you're going for an Associate's degree, but what if you are in your third year of a four-year plan?
Every student working toward college degrees online and on-campus need to be aware of all options available.
Actually, another credit was already there. Called the Lifetime Learning Credit, it was introduced in 2001 with the Hope credit. The Lifetime doesn't offer as much as the Opportunity credit, yet it covers a larger portion of the population. So one should take the bad with this greater good.
The Lifetime Learning Credit is for students who are in their third year of college, taking post-graduate courses or even going part time with as little as one class. Another key difference is a household can have multiple Learning Credits due to having more than one child in college.
What it does is gives a student (or his/her parents) as much as a 20% tax credit for up to the first $10,000, i.e., up to $2,000. What this can be applied to is broader than the Opportunity tax. It can be used for tuition, text books, fees, other education-related items or a combination thereof. The expense-related costs can even include travel for field work.
There are some important restrictions. The most important is a "phase out" point. This is only for individuals who earn less than $60,000 or for when a couple filing a joint return earns over $120,000 adjusted income to get the Lifetime credit. It's also important to know this whole matter is handled by the IRS, not the Board of Education, and they will only hand out one check per household, even if it's for multiple students.
Other provisos include an individual can't get both an Opportunity and a Lifetime credit; just one or the other. Yet, as said before, if a parent has more than one dependent in school, the parent can get credits for all of them if they meet the other criteria.
What must absolutely be understood is the Lifetime is a credit, not a tax deduction. You apply the Lifetime after totaling your taxes, not subtract it from the expenses.
The IRS is doesn't allow this kind of double dipping, and could reject the entire thing. There are a number of other peccadilloes the IRS has and some of them can be pretty detailed (such as advancing your education only to get a better job at another company). So one should have the entire tax form reviewed by an accountant before applying for it.
Still, one could end up with a check from no less than the IRS if you do all this right. That's one quick way to get your college degrees online in a manner that best benefits you financially. Checking into the free scholarships and grants available prior to attending, as well as this credit, means doing more than just your school homework.
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