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TAX INCENTIVES FOR HIGHER EDUCATION
Two Types of Credits are Available for Tuition Deduction
You may be able to claim the Lifetime Learning Credit or the American Opportunity Credit (formerly called the Hope Credit) in order to receive a deductible for certain tuition and expenses for any students in your family who are enrolled in qualified institutions. However, if you aren’t qualified to claim this credit, you may be able to receive a “tuition & fees deduction” for certain educational expenses. You may be able to deduct interest you pay on a qualified student loan. The deduction is claimed as an adjustment to income so you do not have to itemize your deductions on Schedule A Form 1040. However, this deduction is also phased out at higher income levels.
TAX PREPARATION SERVICES
Any CPA firm will tell you that getting your taxes done earlier is better because you can get your refund earlier and get your return processed quicker. Covid-19 experience further proves that if you file early, you get your stimulus checks early. To be able to file early, you may consider doing the following early:
- Organize your tax documents: tax reporting and withholding forms (w-2, 1099s, etc.) as well as deduction information (out-of-pocket medical expenses, charitable donations, mortgage interest, property taxes, etc.)
- Review the prior-year tax return to see if any forms/information might have been overlooked
- Gathering information regarding changes that happened in the past year: for example, did you start a new business? Did you collect unemployment compensation? Did your filing status change, i.e. got married, had a newborn. Did you purchase a new house?