Tax benefits for paying for college?

by Darwin on August 16, 2016

Are you enrolled in an institute of higher education in the United States? If so, you might feel like you’re taking on more debt than you can handle. One of the benefits of paying for college, however, are some of the tax credits and deductions that you can take advantage of. This means that even though obtaining higher education can be expensive, you can help reduce some of the burden when it comes to your finances. More specifically, there are two incentives in particular that can help save you quite a bit of cash.

 

American Opportunity Credit

The American Opportunity Credit is a tax credit that is worth up to $2,500. It can be claimed for a maximum of four years per student, so if your education runs over that amount, you’ll no longer be eligible. You can use this tax credit to alleviate the cost of the first $2,000 of expenses that are eligible, and then $25% of expenses thereafter (up to a total of $500) can be claimed. The credit is for one student per year, meaning that you can claim this one time per student per year if you have multiple students.

 

Lifetime Learning Credit

This credit is particularly cool because it covers any qualified educational university or institution and does not require that students be enrolled in a course of study that seeks a degree. It can also be claimed for an unlimited number of years – there is no cap like the one the American Opportunity Cost imposes. The credit is for up to $2,000, however it is a non-refundable tax credit. This means that it can directly applied to eligible expenses, but not refunded to your account if your expenses don’t total $2000.

 

Are you ready to apply for these awesome tax breaks? Make sure that your Federal Tax ID is set up and ready to go! If need be, you can fill out your EIN application online.

 

Looking to apply for a tax ID number? Start a business? Visit GovDocFiling.com for more.

 

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