Page 18 - HIWT Winter2016 World of Welding

Tax Benefits For Education Deductions

Tax credits and deductions can help offset the expenses of higher You may be able to deduct qualified Tuition and Fees for higher
education for taxpayers. A tax credit reduces the amount of income education expenses paid during the year for yourself, your spouse
tax you have to pay. A deduction reduces the amount of income that or your dependent. The deduction can reduce the amount of your
is subject to tax, thus generally reducing the amount of tax you may income subject to tax. This may be beneficial to you if, for example,
have to pay. you don’t qualify for the American Opportunity or Lifetime Learning
credits.
Credits
Student Loan Interest Deduction may be an option for some tax
An education credit helps with the cost of higher education by payers who have paid interest during the year for qualified student
reducing the amount of tax owed on your tax return. If the credit loans obtained for higher education expenses. A qualified student
reduces your tax to less than zero, you may get a refund. There loan is a loan you took out solely to pay qualified education
are two education credits available: The American Opportunity Tax expenses that were:
Credit and the Lifetime Learning Credit
. • For you, your spouse or a person who was a dependent
Who can claim an Education Credit? You must meet all three of the when you took the loan.
following for either credit. Keep in mind that there are additional • Paid or incurred within a reasonable period of time before
rules for each credit: or after you took the loan.
• For education provided during an academic period for an
1. You, your dependent or a third party paid qualified eligible student.
education expenses for higher education.
2. An eligible student must be enrolled at an eligible For purposes of the Student Loan Interest Deduction, these
educational institution. expenses are the total costs of attending an eligible educational
3. The eligible student is yourself, your spouse or a institutional. They include amounts paid for the following items:
dependent you listed on your tax return.
• Tuition and fees
If you’re eligible to claim the Lifetime Learning Credit and are also • Room and board
eligible to claim the American Opportunity Credit for the same • Books, supplies and equipment
student in the same year, you can choose to claim either, but not • Other necessary expenses (such as transportation).
both. Consult your tax consultant if necessary to determine which
you would receive the maximum benefit. As the tax season will soon be upon us make sure you look at
all options that you may be eligible for to obtain tax benefits for
education expenses.
Information provided by the Internal Revenue Service, www.irs.gov.

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