Kids, College and Taxes
Summer is almost over and kids will soon be going back to school. Some of those will be starting a new adventure with college.
Along with books, dorms and being away from home for the first time, college students and their parents need to think about how they will pay for everything.
The government has various credits, deductions and programs to help (remember, a lot depends on your income levels):
- American Opportunity Credit: this is a credit for the first 4 years of undergraduate study
- Lifetime Learning Credit: this is for college study after you’ve exhausted the American Opportunity Credit
- Student Loan Interest Deduction: if you pay interest on a student loan, a portion of the interest you pay will be deductible
- 529 Plans: these are usually managed by the state and each state has its own benefits. The federal benefit is the ability to have funds grow tax deferred and if the funds are used for qualifying expenses, no tax is owed on the growth
There is simply a lot of things to think about. You need to educate yourself now to see what you qualify for–it can make a big difference.
Let us know how we can help. Give us a call today.
Brent Bracht, CPA