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Say Goodbye to the College Tuition Deduction
Written by MJS Editor
Friday, 01 September 2017 16:34

Many students are headed back to school as summer draws to a close. This year they won't be able to take advantage of the expired college tuition and fees deduction, but there are some good alternatives. This letter also includes tips to reduce your insurance costs over the long run, as well as some guidelines on dealing with debt collection. And, if you've ever needed to hire an employee or contractor, there's an article discussing how to decide which is most appropriate.

It's hard enough to watch your child leave for college. Now you also have to say goodbye to the tuition and fees tax deduction. Congress decided not to extend this $4,000 deduction for 2017, leaving many parents worried that college will now be more expensive.

But it isn't as bad as it sounds. That's because Congress left in place two popular education credits that often offer a more valuable tax break:

Bullet Point The AOTC. The American Opportunity Tax Credit (AOTC) is a credit of up to $2,500 per student per year for qualified undergraduate tuition, fees and course materials. The deduction phases out at higher income levels, and is eliminated altogether for married couples with a modified adjusted gross income of $180,000 ($90,000 for singles).
Mortarboard and money
Bullet Point Lifetime Learning Credit. The Lifetime Learning Credit provides an annual credit of 20 percent on the first $10,000 of tuition and fees, for either undergraduate or graduate level classes. There is no lifetime limit on the credit, but only couples making less than $132,000 per year (or singles making $66,000) qualify. Unlike the AOTC, this deduction is per tax return, not per student.

So who is affected by the loss of the tuition and fees deduction? If you are paying for your student's graduate-level courses and are making too much to qualify for the Lifetime Learning Credit, the tuition and fees deduction was generally the only means you had to reduce your tax bill.

But there's still hope! In addition to the two alternative education credits, there are many other tax benefits that reduce the cost of education. There are breaks for employer-provided tuition assistance, deductions for student loan interest, tax-beneficial college savings options, and many other tax-planning alternatives. Please call if you'd like an overview of the alternatives available to you.

As always, should you have any questions or concerns regarding your situation please feel free to call.

This newsletter is provided by
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27251 SR 54, Suite B-14/308
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Phone (813) 929-3098
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