Change Your Future With Distance Learning Degree Program!
They say continuing one’s education pays off one way or another. What many don’t realize is they can make it pay sooner than they think. The government has a series of tax credits (the American Opportunity, the Hope and the Lifetime Learning) that can put thousands of dollars back in your pocket when it’s time to pay your income tax.
It should first be understood that these credits are administered by the Internal Revenue Service, not the Board of Education. So one shouldn’t expect the money to help pay tuition. It’s money that’s returned after filing every April and requires a special form (8863), which is attached to one’s return. From there, the credit is applied to one’s yearly income tax or, if the person earns a refund, it will be added to a refund check.
Before filing, one should think about a few things first. These three programs are not deductions, they are credits. You only add the 8863 to your tax form after you do everything else. Also, it’s impossible for an individual to get all three at once. Parents might be able to get two or more, but that’s for having more than one child in school at the same time. One thing the IRS allows is for the individual see which credit gets the maximum refund. Talking to a tax consultant before filing is a good idea.
Here are the absolute basics on the three different education tax credits:
(1) American Opportunity – The newest of the three, actually introduced by President Obama in 2009. To be eligible one must be an undergraduate, online or on campus, and carrying at least a half-semester’s worth of courses per semester. Also, to apply one must earn less than $90,000 adjusted gross income if you’re an individual or $180,000 if you are filing a joint return. The maximum credit is $2,500 against taxes or a $1,000 refund.
(2) Hope Tax Credit – This was introduced in 2001. It also can be used during the first two of a student’s four undergraduate years. This time, the maximum income numbers are $60,000 for an individual and $120,000 for a joint return. One very important proviso is that if you attend school in a designated disaster area (such as New Orleans), you can get up to $3,600 credit. Otherwise it’s $1,800.
(3) Lifetime Learning – One could say this credit is for people who don’t fit into the tight restrictions of the first two, that is students from their third academic year into post-grad and those only taking a minimum number of courses a year. The phase out numbers are identical to the Hope. The credit is limited to $2,000 a year and disaster areas are not a factor in this either way.
Traditional and online graduate programs are seeing an upswing in those who are attending or taking classes online due to a desire to increase marketability in these economic times. Seeing what is available before you begin your schooling, such as the college grants, and then taking advantage of these credits, are smart ways to get the most education for your dollar.There is additional information about your scholarships online on the internet.