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					Educational Expenses
Tax Benefits for
Students
About Me
H&R Block Tax Professionals
 Background
 Certifications
 Over 30 hours of additional training annually


                    I love taxes!
Did You Know That…
H&R Block:
   Served more than 20.3 million taxpayers in 2008
   Has been preparing America’s taxes since 1955
   Is the world’s largest tax services               company
   Is close to you with 13,000+ tax offices             and online resources
Tax Benefits for Students
Tax Terminology
 Credits reduce tax liability (taxes owed for the year) and may be nonrefundable
  or refundable
 Deductions reduce taxable income and may be itemized or “above-the-line”
 “Phaseout” means that a tax benefit is subject to reduction and eventual
  elimination when modified adjusted gross income (MAGI) gets to a certain level
Tax Benefits for Students
Basics
 Several tax breaks available for taxpayers and families in college, university, or other post-secondary
  education
 Hope credit and Lifetime Learning credit
 Tuition and Fees deduction
 Student Loan Interest deduction
 All tax benefits mentioned require                                    attendance at an eligible
  post-secondary educational institution
  (an accredited U.S. college, university,
  or trade school)
Tax Benefits for Students
Enhanced Hope Credit
 Introduced by the 2009 Recovery Act and available 2009 – 2010
 Maximum credit $2,500 (100% of first $2,000 and 25%                  of next $2,000 of qualified
  expenses) per student
      Credit is 40% refundable up to $1,000 (but not                refundable if the credit is claimed by a
       child who is                     subject to the kiddie tax)
      Credit cannot be claimed by an individual who is                 claimed as a dependent on another
       taxpayer’s return
Tax Benefits for Students
Enhanced Hope Credit (cont’d)
 Qualified expenses include tuition, fees, related expenses and course materials for the first four years of
  college
 Student must be enrolled at least half time in degree or certificate program
 Phases out for MAGI of $80,000 -                                             $90,000 ($160,000 -$180,000
  joint                                              filers)
       Not available for married
          taxpayers who file separate
          returns
Tax Benefits for Students
Lifetime Learning Credit
   Maximum credit $2,000 (20% of first $10,000 of qualified expenses) per return
   Qualified expenses include tuition, fees, and                           some related expenses
   No course load requirement
   Phases out for MAGI of $50,000-$60,000                              ($100,000 - $120,000 joint filers)
      Not available for married taxpayers who file                           separate returns
 Consider for graduate school or continuing                            education classes
Tax Benefits for Students
More Education Credits
 Tuition may be paid by parent or dependent children
 Parents phased – out of credit might consider not claiming student as a dependent so the student may
  claim the credit.
 For students in the Midwestern Disaster Area:
      Maximum Hope credit is $3,600, but available only for first two years of college and phase-out is the same as
       the Lifetime Learning Credit
      Maximum Lifetime Learning credit is
       $4,000
      Qualified expenses include room and
       board
Tax Benefits for Students
Tuition and Fees Deductions
 Above-the-line deduction of up to $4,000 of qualified expenses per taxpayer
 Qualified expenses include tuition, fees, and some related expenses (similar to Lifetime Learning
  credit)
 May be claimed only by the individual                                      (parent or child) who paid
  the tuition
 No course load requirement —
  consider if phased out of
  Lifetime Learning credit
Tax Benefits for Students
Tuition & Fees Deduction Phase-out
        Filing Status                             MAGI                     Maximum Deduction

    Single, Head of                          $0 - $65,000                             $4,000
      household,
  Qualifying widow(er)                   $65,001 - $80,000                            $2,000

    Married filing joint                    $0 - $130,000                             $4,000
          return
                                       $130,001 - $160,000                            $2,000

       Married filing                                  No deduction available
      separate return

 Note: MAGI as explained earlier but before the Tuition and Fees deduction is considered
Tax Benefits for Students
Student Loan Interest Deduction
 Above-the-line deduction up to $2,500 per taxpayer
 Interest must be paid on qualified education loan (tuition and fees at eligible higher-educational
  institution)
 Phases out for MAGI $60,000-$75,000 ($120,000-$150,000 joint returns)
       Not available for married
          filing separate
 Deductible only by individuals
  (except dependents) who have
  legal liability for the loan
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posted:10/4/2012
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