The Government is Here to Help?
Most people know that there are some tax benefits for higher education expenses, and they are correct. In fact, the Economic Recovery Advisory Board found 18 “education provisions” for higher education! What’s more, they have different eligibility requirements, income limitations and phase-outs, and apply to different years of school. They have different definitions of income and qualified expenses. Oh and they also overlap–you have to be sure you don’t use the same expenses for more than one provision.
Sound complicated? It is. The best example of this is that one of the biggest and best publicized provisions, the American Opportunity Tax Credit, was only claimed on 38% of eligible tax returns, according to a report released last week by the U.S. Treasury. That says it all.
Make sure your college funding plan includes all the tax breaks you are entitled to.
