Friday, January 28, 2011

College Classes For Free Thanks To Uncle Sam

I've been starting in on our taxes via Turbo Tax, speaking of which don't forget to get your 30% off from Bank of America, and came across a pleasant surprise that I was unaware of. You can receive a tax credit for College classes. There are two different credits and TurboTax will ask you the right questions to make sure you qualify and if so, which one would be better. They are called the American Opportunity Credit and Lifetime Learning Credit. If you qualify, basically the government will be paying you to take classes and possibly for any related expenses such as books and supplies. If you don't qualify for one of those, there is an educational tax deduction that should apply and it sounds like you could even use that for training classes, such as certification classes or things of that nature that apply to your line of work.

If you're using a Tax software/online package such as Turbo Tax, they'll ask you all the relevant questions and let you know what would result in the best benefit for your specific situation. My wife Marla will be pursuing a bachelors degree in Health Services Administration at UCF. She is currently enrolled at the Florida State College at Jacksonville, taking care of prerequisite classes to upgrade her existing AA degree to a current FL AA degree which will meet the requirements for UCF.

For us it worked out that the American Opportunity Credit was the best option. As long as you are enrolled in a degree program for at least 1/2 time at some point during the year, that was the best option. Her current program has a minimum 12 hours for full time and she took 6 credit hours of online classes over the summer, so that qualified her for the credit. It is a maximum of $2500 per year for 4 years under this program, which covered the cost of all of her classes last year and her books/graphing calculator. So that was a nice surprise.

If you're considering taking classes at a University or even technical classes to get you further in your job, check out the links below and see if they would be of benefit to you!

Education Tax Credits - Better if you qualify, dollar for dollar increase in refund or reduction in amount you have to pay in taxes.

Education Tax Deductions - Available if you don't qualify for the credit and can possibly be used for technical classes, not specific to college classes, from the looks of it...

IRS Publication 970: Tax Benefits for Education


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