photo by flickr user 401(k)2013 (cc license)
If you’re still not done with your 2014 tax filing, this CBS article is a must read. With information from reliable sources Mark Kantrowitz of FinAid.org and Edvisors, as well as David Levy of Edvisors, the article goes provides quality information on how to maximize a specific tax credit while avoiding the pitfall of a tax credit double dip.
The American Opportunity Tax Credit can knock a quick $2,500 off your tax burden. However, with two students in school, you may be able to claim the maximum $5,000 credit. You can use the tuition funds, books and other school supplies to qualify for this credit, but, unfortunately, room and board do not apply.
There is an income limit for claiming this tax credit, however: $90,000 for a single claimant or $180,000 for a married couple filing jointly.
One strict rule is that 529 funds applied toward an education cannot be used toward claiming this tax credit. 529 funds are already tax privileged, so the IRS does not allow double dipping in this regard. To reach the maximum tax credit claim under the American Opportunity Tax Credit, the money must come from cash or student loans.
There are many more tax credits and deductions available, but the American Opportunity is usually the most helpful for families. If you want to read up on others, head over to the IRS website for its description of available tax benefits for education expenditures.
Disclaimer & Note: the above post from College Parents of America should not be construed as tax advice, but is rather informational or educational in nature. College Parents of America is not qualified to practice in front of the IRS and is not subject to IRS Circular 230. Some of the above may not apply to your individual tax situation. Please consult a tax or legal professional for complete information about your eligibility for any tax credits or deductions related to educational expenditures for the 2014 or other tax years.