Transcript Tax Workshop PowerPoint Presentation

Tax Benefits of
Education
Circular 230 Disclaimer
Any tax advice contained in the body of this
presentation was not intended or written to be
used, and cannot be used, by the recipient for
the purpose of avoiding penalties that may be
imposed under the Internal Revenue Code or
applicable state or local tax law provisions.
Education Expenses
Included
 Tuition
 Fees
 Required Books
 Required Supplies
Excluded
 Room
 Board
 Travel
 Personal Expenses
Tuition Deduction
Income Phase-out $60,000-$80,000 and
$130,000-$160,000
 Unlimited Years and no degree
requirement
 Adjustment $1/$1 up to $4,000

Lifetime Learning Credit
Income Phase-out $53,000-$63,000 and
$107,000-$127,000
 Unlimited Years and no degree
requirement
 .20/$1 up to $10,000
 $2,000 Nonrefundable

American Opportunity Credit
Income Phase-out $80,000-$90,000 and
$160,000-$180,000
 First Four Years Only and must be
Pursuing a Degree
 $1/$1 up to $2,000 then .25/$1 for next
$2,000
 $1,500 Nonrefundable, $1,000 Refundable

Single Parent with 2 Children
Total Income
Adjusted Gross Income
Taxable Income
Total Tax
Total Payments
Refund
$35,000
$35,000
$14,050
$1,460
$2,828
$1,368
Tuition Deduction
Total Income
Tuition Deduction
Tax
Benefit:
Adjusted Gross
Income
Taxable Income
$455
Total Tax
Total Payments
Refund
$35,000
$4,000
$31,000
$10,050
$1,005
$2,828
$1,823
Lifetime Learning Credit
Total Income
Adjusted Gross Income
Tax Benefit:
Taxable Income
Non Refundable Credit
$1,460
Total Tax
Total Payments
Refund
$35,000
$35,000
$14,050
$1,460
$0
$2,828
$2,828
American Opportunity Credit
Total Income
Adjusted Gross Income
Tax Benefit:
Taxable Income
Non Refundable Credit
$2,460
Total Tax
Refundable Credit
Total Payments
Refund
$35,000
$35,000
$14,050
$1,460
$0
$1,000
$3,828
$3,828
Comparison
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Deduction – Refund
Deduction – Benefit
$1,688
$455
LLC – Refund
LLC – Benefit
$2,828
$1,460
AOC – Refund
AOC – Benefit
$3,625
$2,460
Other Tax Benefits
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Prepay (Save)
Qualified Tuition Programs (529)
Coverdell Education Savings Account
Pay
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Penalty Free IRA Distributions
Tax-Free Savings Bond Redemptions
Repay
Tax-Free Student Loan Repayment Assistance
Student Loan Interest Deduction
Don’t Pay
Tax-Free Student Loan Cancelation
Tax-Free Scholarships and Grants (Most of the time)
Tax-Free Employer Assistance
MA State Tax Provisions
Tuition Deduction
 Exceeds 25% of AGI
 Undergraduate Only
 Tuition and Fees Only
Student Loan Interest
 Undergraduate Only
 No Limit
Key Documents
1098-T (Tuition Statement)
 1098-E (Student Loan Interest)
 Copy of Bill
 Copy of College’s “Budget”
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How to File
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IRS Free File Options
– Worcester State College
 Branded Tax Software
 Fillable Forms
 VITA

MA DOR WebFile (Free)
Resources
IRS for College Students
 IRS Education Credit Comparison Chart
 MA DOR Education Deductions
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Thank You!