#Who Qualifies for the Tuition and Fees Deduction?

[dayaxwriter]

Are education expenses tax deductible ?

Outline:

Introduction

Understanding Tax Deductions

What Are Tax Deductions?

Common Tax Deductions

Education Expenses and Tax Deductions

Eligible Education Expenses

Qualifications for Tax Deductions

The American Opportunity Credit

Who Qualifies for the American Opportunity Credit?

How Much Can You Claim?

The Lifetime Learning Credit

Who Qualifies for the Lifetime Learning Credit?

How Much Can You Claim?

Tuition and Fees Deduction

Who Qualifies for the Tuition and Fees Deduction?

How Much Can You Claim?

Student Loan Interest Deduction

Who Qualifies for the Student Loan Interest Deduction?

How Much Can You Claim?

Employer Tuition Assistance

Tax-Free Educational Assistance

Limits on Employer-Provided Education Benefits

Educational Savings Accounts

Coverdell Educational Savings Account (ESA)

529 Plans

Tax Deductibility of Work-Related Education

Qualifying Work-Related Education Expenses

Exceptions and Limitations

State Tax Deductions for Education Expenses

State-Specific Deductions and Credits

Researching State Tax Laws

Recordkeeping and Documentation

Importance of Proper Documentation

Retaining Education Expense Records

The Impact of Income on Deductibility

Phase-Out Limits for Education Expenses

Other Education-Related Tax Benefits

Student Loan Forgiveness Programs

Employer Student Loan Repayment Assistance

Tax Deductibility of Education Expenses for Self-Employed Individuals

Conclusion

Are Education Expenses Tax Deductible?

Education is a vital aspect of personal and professional growth, but it can also come with a hefty price tag. As individuals pursue higher education, the question of whether education expenses are tax-deductible becomes essential. In this article, we will explore the various tax deductions and credits available to help alleviate the financial burden of educational pursuits.

Understanding Tax Deductions

What Are Tax Deductions?

Tax deductions are specific expenses that taxpayers can subtract from their total income, ultimately reducing the amount of income that is subject to taxation. Deductions lower the overall tax liability, resulting in potential tax savings for eligible individuals.

Common Tax Deductions

Before delving into education-related deductions, it's essential to understand some common deductions available to taxpayers, such as:

Ø Home mortgage interest

Ø Charitable contributions

Ø Medical expenses

Ø State and local taxes

Ø Retirement contributions

Ø Education Expenses and Tax Deductions

Eligible Education Expenses

The Internal Revenue Service (IRS) allows taxpayers to claim certain education expenses as deductions or credits. Eligible expenses often include:

· Tuition and fees for enrollment

· Books, supplies, and required course materials

· Necessary equipment for courses

· Qualified educational software

· Qualifications for Tax Deductions

To qualify for education-related tax deductions, certain criteria must be met. Generally, the education must be for the taxpayer, their spouse, or a dependent. Additionally, the expenses should be related to enrollment in an eligible educational institution.

The American Opportunity Credit

§ Who Qualifies for the American Opportunity Credit?

The American Opportunity Credit is a tax credit that offers substantial financial assistance to eligible students pursuing higher education. To qualify, students must be pursuing a degree or other recognized educational credential and be enrolled at least half-time in their program.

§ How Much Can You Claim?

As of the time of writing, the American Opportunity Credit allows eligible taxpayers to claim up to $2,500 per student per year for the first four years of post-secondary education.

The Lifetime Learning Credit

o Who Qualifies for the Lifetime Learning Credit?

Unlike the American Opportunity Credit, the Lifetime Learning Credit is available to both undergraduate and graduate students, as well as those pursuing professional degrees or taking classes to acquire or improve job skills.

o How Much Can You Claim?

As of the time of writing, the Lifetime Learning Credit permits eligible taxpayers to claim up to 20% of the first $10,000 of qualified education expenses, resulting in a maximum credit of $2,000 per tax return.

Tuition and Fees Deduction

Ø Who Qualifies for the Tuition and Fees Deduction?

The Tuition and Fees Deduction allows eligible taxpayers to deduct qualified education expenses even if they do not itemize deductions on their tax return.

Ø How Much Can You Claim?

As of the time of writing, eligible taxpayers may deduct up to $4,000 from their taxable income.

Student Loan Interest Deduction

I. Who Qualifies for the Student Loan Interest Deduction?

Taxpayers who have taken out student loans to cover qualified education expenses may be eligible for the Student Loan Interest Deduction.

II. How Much Can You Claim?

As of the time of writing, eligible taxpayers can deduct up to $2,500 of student loan interest paid throughout the tax year.

Employer Tuition Assistance

i. Tax-Free Educational Assistance

Employers may offer tuition assistance to employees as part of their benefits package, and in some cases, this assistance may be tax-free up to a certain limit.

ii. Limits on Employer-Provided Education Benefits

While employer-provided tuition assistance can be advantageous, there are specific limitations to be aware of, such as the maximum amount of tax-free assistance allowed per year.

Educational Savings Accounts

· Coverdell Educational Savings Account (ESA)

Coverdell ESAs are tax-advantaged accounts designed to help families save for education expenses.

· 529 Plans

529 Plans are state-sponsored savings plans that offer tax benefits for qualified education expenses, including tuition, books, and room and board.

Tax Deductibility of Work-Related Education

§ Qualifying Work-Related Education Expenses

Expenses related to education undertaken to maintain or improve skills needed in one's current employment or to meet the employer's requirements may be tax-deductible.

§ Exceptions and Limitations

The IRS imposes certain exceptions and limitations on work-related education deductions, which taxpayers should be aware of.

State Tax Deductions for Education Expenses

o State-Specific Deductions and Credits

Apart from federal deductions and credits, some states offer additional tax breaks for education expenses.

o Researching State Tax Laws

It is essential to research the specific tax laws in your state to determine the available deductions and credits related to education expenses.

Recordkeeping and Documentation

ü Importance of Proper Documentation

Maintaining accurate and detailed records of education expenses is crucial when claiming tax deductions or credits.

ü Retaining Education Expense Records

Taxpayers should keep all relevant documents, including tuition statements, receipts, and enrollment records, to support their claims.

The Impact of Income on Deductibility

* Phase-Out Limits for Education Expenses

The availability of certain education-related deductions and credits may be affected by the taxpayer's income level.

Other Education-Related Tax Benefits

Ø Student Loan Forgiveness Programs

Certain federal student loan forgiveness programs may offer tax-free forgiveness of the remaining loan balance.

Ø Employer Student Loan Repayment Assistance

Some employers may provide student loan repayment assistance as an employee benefit.

Ø Tax Deductibility of Education Expenses for Self-Employed Individuals

Self-employed individuals may be eligible to deduct qualified education expenses as business expenses.

Conclusion

Education is a lifelong pursuit that comes with various costs, but the good news is that there are several tax deductions and credits available to help ease the financial burden. From the American Opportunity Credit to employer tuition assistance and state-specific benefits, exploring these options can make a significant difference in managing educational expenses.

Now, take advantage of the tax benefits and invest in your future. Maximize your potential, both personally and professionally, through the power of education.

FAQs

Can I claim tax deductions for my child's education expenses?

Yes, you may be eligible to claim certain education-related deductions or credits for your child's education expenses, depending on your circumstances.

Are student loan interest payments always tax-deductible?

No, the deductibility of student loan interest payments depends on various factors, including your income and filing status.

Can I claim education expenses if I am attending school part-time?

Yes, in some cases, you may still be eligible to claim education-related tax benefits while attending school part-time. Be sure to review the specific requirements for each credit or deduction.

What is the difference between a tax deduction and a tax credit?

Tax deductions reduce your taxable income, while tax credits directly reduce the amount of taxes you owe.

How do I know if my state offers additional education-related tax benefits?

You can visit your state's official tax website or consult with a tax professional to understand the specific education-related tax benefits available in your state.

[classroomlearning]

Scholarships at Brainware University - Empowering Excellence

Apply Now!

At Brainware University, excellence is not just a goal but a celebrated achievement. The institution recognizes the potential and dedication of its students through a variety of scholarship schemes designed to support academic brilliance and encourage all-round development. Let's delve into the comprehensive scholarship offerings that distinguish Brainware University as a beacon of educational empowerment.

Brainware Vidyalankar Scholarship (Brainware Academic Excellence Scholarship)

The Brainware Vidyalankar Scholarship aims to reward exceptional academic performance:

For Undergraduate Programs: Students scoring between 90% and less than 95% in their qualifying exams receive a half waiver on tuition fees. Those achieving 95% or above enjoy a full waiver.

For Top Performers: Toppers from institutions scoring less than 90% are granted an additional Rs. 25,000/- over and above their Brainware Merit Scholarship.

Brainware Medha Britti Scholarship (Brainware Merit Scholarship)

This scholarship rewards consistency and academic excellence throughout the academic career:

Undergraduate Programs: Amounts vary based on marks obtained in 10+2, ranging from INR 15,000/- to INR 70,000/- for different programs and score brackets.

Postgraduate Programs: Scholarships range from INR 15,000/- to INR 50,000/-, supporting students based on their academic performance in previous degrees.

Brainware Vidya Jyoti Scholarship (Brainware Degree Enhancement Scholarship)

For students pursuing post-graduation after completing their graduation at Brainware University, this scholarship supports their continued academic journey.

Brainware Krira Ratna Scholarship (Brainware Sports Scholarship)

Recognizing achievements beyond academics, this scholarship supports students who have excelled in sports:

National/International Level: Full tuition fee waiver.

State Level: Half tuition fee waiver.

District Level: 25% tuition fee waiver.

Scholarship Criteria and Conditions

Eligibility: Candidates must maintain a minimum academic standard of 60% throughout their academic career to be eligible for most scholarships.

Exclusions: Certain programs such as M.Pharm, B.Pharm, D.Pharm, B.Sc Nursing, GNM, LLM, M.Sc Maths, MSc Applied Psychology, and MA English have specific exclusions from these scholarship schemes.

Application and Disbursement: Scholarships are deducted from the last semester fees, ensuring financial assistance directly benefits students nearing completion of their programs.

Choosing Excellence at Brainware University

The availability of diverse scholarship options underscores Brainware University's commitment to fostering talent across various disciplines. Whether through academic achievements, sports prowess, or post-graduation aspirations, the university stands as a pillar of support and encouragement for its students.

As prospective students consider their educational journey, Brainware University not only promises academic rigor and industry-aligned programs but also ensures that financial constraints do not hinder deserving candidates from achieving their full potential. With a culture that values meritocracy and holistic development, Brainware University continues to empower students to excel, innovate, and lead in their chosen fields.

For those aspiring to join a community where excellence is both recognized and nurtured, Brainware University beckons as a place where dreams take flight, supported by robust scholarship opportunities and a commitment to student success.

In conclusion, Brainware University's scholarship programs embody its ethos of excellence and inclusivity, offering a pathway for students to realize their academic ambitions and contribute meaningfully to society.

[bluespringsincometaxpreparation]

📚🌟 Maximize Your Savings with Education Tax Benefits! 🌟📚 Are you or your loved ones pursuing higher education? Don’t miss out on valuable tax breaks! 🎓💰 1. American Opportunity Tax Credit (AOTC): Up to $2,500 per student for qualified education expenses. If the credit reduces your tax to less than zero, you may even get a refund! 💸 Ideal for undergraduates seeking a degree. 2. Lifetime Learning Credit (LLC): Available for both degree and non-degree courses. Covers 20% of up to $10,000 in eligible expenses. Perfect for lifelong learners and professionals enhancing their skills. 3. Tuition and Fees Deduction: Deduct up to $4,000 in qualified education expenses. Reduces your taxable income directly. Great for those who don’t qualify for education credits. Remember, education tax benefits can significantly ease the financial burden of tuition, textbooks, and other educational costs. Consult IRS Publication 970 for detailed information and eligibility criteria 12. Share this post with fellow students and learners! Let’s make education more affordable and accessible for everyone. 🙌🎒✨

[harbourfronttechnologies]

Education Savings Accounts: What You Need to Know

Education Savings Accounts, or ESAs, are a relatively a type of savings account that allows parents to save money for their child's education. These accounts have become increasingly popular in recent years as more and more parents seek to find ways to pay for their children's college educations. In this blog post, we will discuss the basics of Education Savings Accounts: what they are, how they work, and who is eligible to open one. We will also answer some common questions about ESAs, such as eligibility requirements and tax implications. So if you're thinking about opening an ESA for your child's education, be sure to read this post.

What is an Education Savings Account?

An ESA is an individual savings account specifically designed to save money for postsecondary education expenses. ESAs are similar to other types of saving accounts, but they come with certain tax advantages and restrictions that make them ideal for educational purposes.

How Does an Education Savings Account Work?

When you open an ESA, you can make contributions to the account with after-tax money. These contributions are not immediately taxable, and your investments grow tax-free. When it comes time for your child to use the money, any funds withdrawn from the account are also tax-free provided they are used to pay for qualified postsecondary education expenses such as tuition, books, fees, and supplies.

Who is Eligible to Open an Education Savings Account?

Generally, anyone can open an ESA. However, there are certain eligibility requirements that must be met in order to qualify for the tax advantages associated with ESAs. Depending on your state of residence, you may need to meet a certain income level or other criteria in order to open an ESA.

What are the Tax Implications of Education Savings Accounts?

As mentioned above, contributions to ESAs are not immediately taxable, and your investments grow tax-free. Withdrawals from the account will also generally be tax-free as long as you use them for qualified education expenses such as tuition, books, and supplies. However, there are certain restrictions on how much you can contribute each year as well as penalties for non-qualified withdrawals. Be sure to check with an accountant or financial advisor before opening an ESA in order to determine whether it is the right choice for you and your family.

What are the benefits of Education Savings Accounts?

There are many benefits to ESAs, including tax advantages and the ability to save for your child's future. By investing in an ESA, you can ensure that your child is prepared for college without incurring debt or having to worry about paying for expenses out of pocket. Additionally, since these accounts come with certain restrictions, you can help your child make responsible financial decisions as they prepare for their future.

What are the drawbacks of Education Savings Accounts?

Though ESAs offer many advantages, there are some drawbacks as well. For example, contributions to an ESA are limited and you will have to pay taxes if the funds are withdrawn for non-qualified expenses. Additionally, ESAs may not be the best choice for everyone. Depending on your financial situation and the type of education you want for your child, other savings accounts may be more beneficial.

FAQs

What are the eligibility criteria for opening an Education Savings Account?

The eligibility requirements vary by state, but generally, you must meet certain income requirements and other criteria in order to qualify for the tax advantages associated with ESAs. Be sure to check with your state's Department of Education or a financial advisor for more information.

Are contributions to Education Savings Accounts tax-deductible?

No, contributions to ESAs are not tax-deductible. However, your investments are allowed to grow tax-free, and withdrawals from the account will generally be tax-free as long as you use them for qualified education expenses such as tuition, books, and supplies.

Are there any restrictions on how much I can contribute to an Education Savings Account?

Yes, there are certain restrictions on how much you can contribute each year. Be sure to check with an accountant or financial advisor before opening an ESA in order to determine the maximum contribution for your situation.

How can I ensure my Education Savings Account funds are used for qualified expenses?

The best way to ensure that your ESA funds are used for qualified expenses is to discuss the details with your financial advisor and create a plan for responsible spending. Additionally, you should review IRS guidelines to make sure that any purchases are eligible for tax-free treatment.

Are there fees and commissions associated with Education Savings Accounts?

Yes, there may be fees or commissions associated with ESAs that you should consider when making your decision. Be sure to consult with a financial advisor or review the ESA documents in order to understand any associated costs.

Do I have to use my Education Savings Account funds for college expenses?

No, you do not have to use your ESA funds exclusively for college expenses. The funds can be used for any qualified education expenses such as tuition, books, and supplies. Additionally, the funds can be used to pay for private school tuition or K-12 expenses.

Are there penalties if I withdraw funds from my Education Savings Account?

Yes, there are strict rules and regulations with ESAs, and if you withdraw funds for non-qualified expenses you could be subject to penalties. Be sure to check with your state's Department of Education or a financial advisor before making any withdrawals.

What should I consider when deciding between an Education Savings Account and another type of savings account?

When deciding between an ESA and another type of savings account, you should consider your financial goals and the types of education expenses that you would like to cover. Additionally, you should compare the potential tax advantages and other features of both accounts to determine which one is best for your situation.

What happens to the Education Savings Account funds if my child does not go to college?

If your child does not attend college or use their ESA funds for qualified expenses, you will be subject to taxes and penalties on any distributions from the account. However, many states allow you to transfer the funds from an ESA to another family member or use the money for other educational expenses such as graduate school or private school tuition. Be sure to check with your state's Department of Education or a financial advisor for more information on the specifics of your situation.

What are the age restrictions for opening an Education Savings Account?

Generally, you can open an ESA at any age, but you must be the legal guardian of the beneficiary, which is typically a child. Additionally, your state may have specific rules regarding the age of the beneficiary. Be sure to check with your state's Department of Education or a financial advisor for more information.

Are there any investment options available with Education Savings Accounts?

Yes, many ESAs offer a variety of investment options to help you grow your savings. Be sure to review the details of your ESA plan in order to understand your available options. Additionally, you should consult with a financial advisor to determine an appropriate strategy for achieving your goals.

The bottom line

Overall, Education Savings Accounts are a great way to save for your child's education and ensure that they have the resources needed to succeed. By opening an Education Savings Account (ESA), you can help your child prepare for their future and enjoy certain tax advantages in the process. Be sure to check with a financial advisor and familiarize yourself with the restrictions and guidelines before opening an ESA in order to make sure it is the right choice for your family.

Originally Published Here: Education Savings Accounts: What You Need to Know

from Harbourfront Technologies - Feed https://harbourfronts.com/education-savings-accounts-esa/

[lucifer-is-a-bag-of-dicks]

Hi hello I know I’m late but I’m the Canadian who messaged you about paying for grad school. We do have a relatively good loan system here. We can take out student loans and we don’t have to start paying them back until I think 6 months after we graduate. The interest we pay is also tax deductible. If you’re disabled like I am you most likely qualify for grants as well which you don’t ever have to pay back however I think those are provincial and not federal so idk if everyone in all provinces can get them. The cost of tuition here is also much lower unless you’re going to a fully private university like my cousin did then it’s about the same as the states. Most universities are subsidized by the government though so it’s cheaper for example in undergrad right now I pay about 2500 per semester for tuition and fees and then there’s books on top of that yet. Also one of my major pet peeves I have to pay for parking which pisses me off lol

ah yes, parking, the universal Fuck You to students

honestly I'm just glad to hear y'all have it better than america does, some of these stories I've heard make me want to sympathetically stress cry

[mmorgxchange]

W-4 and jd edwards enterprise one

These items must be required of all students in the course of instruction. Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution.Tuition and fees required to enroll at or attend an eligible educational institution, and.For this purpose, qualified expenses include Scholarships that can be used to pay any expense (such as room and board) are nontaxable when spent on qualified expenses and taxable when spent on nonqualified expenses. Under current law, scholarships required to be used for tuition and fees remain nontaxable when applied to tuition and fees. The TCJA does not make changes to the rules for scholarships, fellowships and grants. Nontaxable Scholarship and Grant Rules Stay the Same Forms:įorm 8863 together with Form 1040 or 1040-SR tuition and fees reported on Form 1098-T. Because the lifetime learning credit is smaller than the AOC, students who qualify for both credits choose the AOC. The lifetime learning credit is generally claimed by graduate students, by undergraduate students enrolled less than half-time, and by students who work full-time and take a class or two to develop skills or finish a degree. There is no limit on the number of years the lifetime learning credit can be claimed, and the student does not have to enroll in a minimum number of hours to claim the credit. The lifetime learning credit is a credit of up to $2,000 for qualified education expenses paid for all eligible students included on the taxpayer’s tax return. Tax reform didn’t change the lifetime learning credit. Students may need to work together with their parents to determine the amount of eligible expenses to claim the credit and make sure their parents have copies of Form 1098-T, receipts for expenses and the account transcript. The AOC is generally claimed by the parents of undergraduate students. Eligible students must be enrolled at least half-time for at least one academic period and must be pursuing a program leading to a degree or other recognized credential. It’s only available for four tax years per student and if a student hasn’t completed the first four years of postsecondary education before the end of the tax year. Up to $1,000 of the credit is refundable. The AOC is a credit of up to $2,500 per eligible student. The TCJA didn’t change the American Opportunity Credit (AOC). American Opportunity Credit Stayed the Same Read on to learn about other tax benefits. Tax reform didn’t change popular education tax credits, such as the American Opportunity Credit and the Lifetime Learning Credit.ĭue to the Bipartisan Budget Act and the Taxpayer Certainty and Disaster Tax Relief Act of 2019, the tuition and fees deduction was extended. Tax Benefits for People Saving for EducationĮducation & Tax Reform for Students in College.Education Tax Deductions and Benefits for People With Student Loans.Education and Tax Reform for Students in College.To help you find the areas that are relevant to you, we’ve grouped the information in three sections below: This article discusses education tax reform changes. However, tax reform left popular education tax benefits unchanged (such as the credits and the student loan interest deduction).Įducation tax benefits available are different depending on whether the taxpayer is currently attending college, have student loan payments, or are saving for college. The Tax Cuts and Jobs Act (TCJA) modified and eliminated a few benefits for people who are saving for college and people who are paying off their student loans. Editor’s Note: This article was originally published on Decemand updated in 2020 for relevancy.

[sandberghart34-blog]

Student Loans - An Aid To Get The Education And Learning Required In The Requiring World Of Today

Student Car Loans - An Aid To Obtain The Education And Learning Needed In The Demanding World Of Today For a long time education and learning has actually been a desired and also demanded achievement by those less fortunate and also as we move ahead in the infancy of the 21st century, the better the demand comes to be for a higher, broader, extra innovative and also adaptable qualification span that satisfies and matches the ever raising work market needs. Capability rules the day and also young people more than ever previously, are required to concentrate on intending in advance meticulously for their academic as well as revenue drivened future. To examine well and acquire a great educational basis is a required active ingredient in the world today and taken into consideration among the most vital decisions of our lives. Undeniably a level is advantageous to those who comprehend ways to apply it to their benefit as well as at practical cost. While discovering what line of education and learning to comply with, the trainee is faced with one more similarly vital concern that needs to be computed. Educational tuition does not constantly come at no monetary price and unless the pupil has the opportunity to spend for tuition using family members or job, they may discover themselves needing to start pupil life off by obtaining to cover these prices, relying on where the student is geographically situated and what line of education and learning they intend to pursue. Naturally, each country is geared up with their own practice as well as typically have numerous differing chances of economic aid for students taking higher education. These could be in the form of grants or aids, as well as governmental pupil finances and also finances granted by private entities - all based on differing scenarios and also underlying variables that have to be thought about. In Scandinavia for instance - i.e. Denmark, Sweden and also Norway, their educational car loan techniques, while not completely the same are similar to one another; Student gives and also finances are generally administered by the private national educational ministry for grants as well as financings. Students of eighteen years old as well as above are qualified to a free give which is after that managed in part based on their parents revenue if they are under the age of twenty. This indicates that a student of between eighteen and also twenty years old would get a give of a certain amount. Nevertheless, if the parents have a revenue bracket that gets on a greater level, the quantity of the give provided by the instructional ministry would certainly be controlled to where it would certainly after that be the moms and dads of the trainee that would certainly subsidise the remainder. The technique used for pupils residing on their very own, who are older compared to twenty nonetheless, is that they get a grant of about eight-hundred-fifty-dollars a month and also where necessary, the student is permitted to supplement this quantity with added monies through a student funding of approximately half of the actual give quantity, which should be paid back after conclusion of their education. So effectively interesting would get an annual quantity of roughly fifteen thousand dollars. While University and Senior high school access as well as tuition is cost free in this component of the world, there are included benefits in Europe of requesting gives as well as loans from the European Union. Approval for these applications would certainly depend upon the academic line the pupil has picked, however there is really wide variety of academic and college subjects for registration to consider. Even as a part-time or disabled or older person - student aids, gives and also finances could be provided. Credentials would certainly rely on a number of variables such as; where the pupil will certainly research (i.e. which nation) the amount of household revenue, what kind of education and learning or program is intended and so on. Additionally, students living in European Union member nations are allowed to get enrollment to other member nation colleges or other educational institute. Cross-boarder education is encouraged nevertheless, there can be other lending, grant and tuition charge regulations that need to be considered as each participant country has their own tuition cost technique. European Union guidelines stipulate, that pupils from any kind of participant nation are qualified to the exact same help with costs as those in their home country. Various other, non-EU pupils would usually have to pay much higher fees. Nevertheless, cross-boarder education could be extremely fulfilling indeed for the pupil and there are numerous centers well worth thinking about. In order to make it through the daily aspects of the price of living, numerous trainees are compelled to take a job during term. After class there are feasible home-studies as well as work-groups to plan for the next day or following lesson so work that students have the ability to get rid of time-wise are generally working in bars, restaurants, resorts as well as retail markets. In the friendliness market students can gain a reasonable quantity in tips and these aid with their day-to-day costs, so much to make sure that some pupils have the ability to save and also pay off any kind of trainee funding they carry conclusion of their research studies, while numerous other students for numerous factors are not able to do this. Nonetheless, in some cases and funding payment country practice a moratorium is given for student finance settlement up until such time as the grad is making a specific quantity. The quantity will differ from nation to nation and the loan setup made at the time, yet on the whole payment terms are tolerant. There are numerous kinds of trainee fundings available the world over. Those that seem most common in the United States as apposed to those in Europe are the government and personal trainee car loans. The United States Department of Education and learning's Federal Student Help programs handle the government financed lendings. The government instructional funding is most likely one of the much less hard to obtain. Other common trainee car loan programs can be acquired via 1 or 2 significant US banks. While exclusive student finances are readily available and also are usually charged with a higher interest rate as they are usually unprotected.

The interest on government lendings are tax-deductible and also in many cases it isn't really needed to repay the student loan. There are numerous type of trainee debt combination intends offered. However, most of them offer the same solutions. These advantages include reducing the size of monthly repayment, reducing the regular monthly settlement by a specific percent and so forth. Trainees having actually finished their education and learning who are for whatever factor unable to settle their finances on due dates, might encounter troubles in getting credit rating in the future. These could be anything from mortgages, vehicle loan to bank card, or similar. It could therefore be a benefit to certain extent to consider pupil debt consolidation choices that are readily available to avoid adverse effects later in life. As a result of the increasing variety of debt loan consolidation companies surfacing world-wide, it's a good idea to research study each entity prior to participating in any setup.

[sheryllsblog]

Saving for College: Life Insurance or a 529 Plan?

In the United States, the average cost of a four-year college is $35,720 per student, according to recent data published by the Education Data Initiative. Parents who want to help their children fund at least part of their college tuition often start saving from the minute the child is born. Starting early gives parents time to accumulate a significant sum, which is especially important if you have multiple children.

Many new parents wonder, what’s the best way to save for college? Since there are many savings vehicles available, it can be hard to figure out which will yield the best returns.

How 529 Plans Work

A 529 plan is designed specifically to help parents save for education, including grades K-12, apprenticeships, undergraduate school, and graduate school. There are two types of 529 plans: education savings and prepaid tuition.

A 529 savings plan (the more popular option) grows tax-deferred. If you withdraw funds from the plan to pay for qualified education purposes, you don’t pay taxes on the withdrawal. The contributions you make are invested in mutual fund or exchange-traded fund portfolios.

A prepaid tuition plan allows you to pay tuition in advance, which has the benefit of locking in the current rate (assuming costs will rise in the future). These plans also have tax advantages, but they are only offered in a handful of states. In most cases, the funds don’t cover room and board, which is something to keep in mind.

What Are the Pros of a 529 Plan?

Like every investment vehicle, a 529 plan has pros and cons. Since only 10 states offer a prepaid tuition 529 plan, we will focus on the pros of education savings plans.

No annual contribution limits — There are no limits to how much you can contribute to your plan each year. While some states limit how much you can contribute in total, the ceiling is quite high, ranging between $235,000 and $529,000.

Tax advantages — Your earnings from your 529 investments are exempt from both federal and state income taxes (as long as you use the money to pay for education). More than 30 states offer tax deductions or credits for 529 contributions as well.

Flexibility — If you have money left in your 529 plan after college tuition has been paid or if your child decides not to go to college, you have several options.

Change the name of the beneficiary (without changing accounts)

Leave the money there in case the current beneficiary decides to use it in the future

Withdraw the funds and use them for something else (and face a 10% penalty — see more about that below.)

Anyone can open a 529 plan — You don’t need to fall into a certain tax bracket to open up a 529 plan. You can open up a plan regardless of your income.

What Are the Cons of a 529 Plan?

While a 529 plan has several benefits, there are also some disadvantages. These include:

Strict rules about usage — The savings that you accumulate must be used to pay for qualified education expenses. If you use the funds for something else, you’ll be charged a 10% penalty.

Laws vary by state — Each state has its own laws about 529 plans. If you move to a different state, it’s possible that income tax deductions and credits will be subject to recapture in the new state.

Fees — Like most investments, 529 plans have fees. The fees are taken from your contributions, so the higher the fees, the less funds will go to your actual savings account. It’s important to take a little time and search for a 529 plan with low fees.

Financial aid — The savings in a 529 plan count as an asset when your child applies for financial aid for college. The actual impact is greater if your child is the owner of the account, and a little less if you own the account. Either way, 529 ownership has the potential to detract from the financial aid your child qualifies for.

529 Plans: Limited investment options

Since the goal of a 529 plan is to accumulate enough money to pay for college tuition, the investments on the table are relatively low-risk. Some states even offer target-date funds that adjust your investments as your child gets closer to college-age to ensure that there are enough funds.

If you’re someone who has investment experience, you may look at the 529 options and feel limited. In fact, you might even prefer to choose a different type of investment that has the potential to yield more, even if it means forgoing the tax benefits of the 529 plan.

On the other hand, if you’re someone who’s not that financially savvy and prefers to open up a savings account and forget about it, a 529 plan can be the perfect solution. It’s a low-maintenance, straightforward way to accumulate savings. For this reason, having limited investment options is both a pro and a con.

How Permanent Life Insurance Works

Permanent life insurance is another good option for saving for college. Unlike term life insurance, which pays out a death benefit when the beneficiary dies, permanent life insurance offers both a death benefit AND a savings component.

When you pay premiums for permanent life insurance, a portion goes toward the death benefit, another portion goes toward the savings component, and yet another portion is used to pay for administrative fees.

There are several types of permanent life insurance, but whole life insurance is the most popular one.

Pros of Using Life Insurance for College

There are many benefits of using permanent life insurance as an investment, but in this article, we’re zooming in on using the cash value to save for college. Pros of using life insurance to save for college include:

Financial aid — When your child applies for financial aid for college, the savings in your life insurance account are not considered.

Tax advantages — Funds in your permanent life insurance account grow tax-deferred, like those in a 529 plan.

Savings can be used for anything — Unlike a 529 plan, the savings in your life insurance account can be used for anything (beyond college costs). If your child decides not to go to college, you can still use the accumulated cash during your lifetime without being penalized. For example, many people use permanent life insurance to supplement their retirement savings.

Flexibility — There are several ways you can use your savings to pay for your child’s college tuition:

Borrow against the cash value (which is easier than taking out a traditional loan, plus the interest rates are usually lower)

Withdraw a portion of the cash value

Surrender the policy and receive the entire cash value (though you will be charged a surrender fee in this case)

Cons of Using Life Insurance for College

While using permanent life insurance as a way to save for college has several advantages, there are also several drawbacks. The main ones include:

It can be expensive — Permanent life insurance is expensive, significantly more so than term. If you’re looking for affordable life insurance, term is your best option. If you’re looking for a savings account, permanent life insurance is a relatively expensive one to maintain. Its fees can often be more expensive than those of a 529 plan.

Takes time to accumulate cash value — While it’s always best to start a college savings fund as early as possible, with permanent life insurance, it’s essential. It usually takes 10 years for the amount in your cash value savings to surpass the amount paid in premiums, which means you’ll need to buy this type of life insurance before your child is born or immediately after in order for it to be worthwhile as a savings vehicle.

Is Life Insurance a Good Way to Save for College?

Life insurance can be a good way to save for college — for certain people, in certain situations. While there are several benefits of using the cash value of a permanent life insurance policy to fund college tuition, there are also other investment tools, like a 529 plan, that offer their own set of benefits.

The best way to decide if life insurance is the right savings tool for you is to consult with a financial advisor, someone you can trust to guide you in the creation of a solid financial plan. If you’re interested in buying permanent life insurance as a way to save for college AND a way to ensure that your loved ones are covered in case you die, the insurance advisors at Sproutt can give you advice about which type of permanent policy is best.

How Does Permanent Life Insurance Work?

Permanent life insurance is an umbrella category that includes different types of policies, including whole and universal. Whole life insurance is often chosen to pay for college. Most permanent policies accumulate a cash value and last the policyholder’s entire lifetime.

Term life insurance, on the other hand, is a completely different type of policy. It only lasts for a certain number of years, called a term, and doesn’t come with a cash value. Due to the lack of cash value, it shouldn’t be considered if saving for college is your main goal. (However, it’s a good type of life insurance for college students themselves — discussed at length further on.)

The way permanent life insurance works is that a portion of your monthly premium goes toward paying for death benefit coverage and another portion gets deposited into a separate cash value account. The money in the account grows tax-deferred and isn’t considered an asset when applying for financial aid for college.

Accessing the Cash Value of a Permanent Policy

There are several ways to access the cash value of your policy to pay for your child’s college education. You can:

Take a loan against the value of your policy, which you must pay back in full. (If you die before the loan is paid back, the outstanding debt will be taken off the policy’s death benefit.)

Withdraw the cash value, so you don’t need to pay back the loan but you know from the get-go that the death benefit will be reduced.

Surrender the policy and receive the entire cash value. A universal life policy will also have a surrender fee charged by insurers. This is the least ideal option, since your entire policy will be liquidated.

Bottom Line

Yes, it’s possible to use life insurance to pay for your child’s college education. In addition to the death benefit that’s standard to all life insurance policies, the cash value of a permanent policy can be used as a sort of child life insurance college fund. However, there are pros and cons when comparing permanent life insurance to other investment vehicles, namely the 529 plan.

When deciding which investment vehicle to choose, the main thing to keep in mind is that in order for a permanent policy to be a worthwhile savings plan for college, you need to buy it when your child is a baby or toddler.

Credits to: Elana Kutscher

Date Posted: November 22, 2021

Source: https://sproutt.com/blog/using-life-insurance-to-pay-for-college

[hirenest]

Workplace Benefits for Recent Grads

What kind of benefits should recent grads expect from their employers? The answer depends on whether they are working full time or part time. Learn more: https://blog.hirenest.com/workplace-benefits-for-recent-grads/

In addition to salary, employees also receive various types of benefits. These include health insurance, dental coverage, life insurance, paid vacation days, 401k matching, and other perks. Some companies offer additional benefits such as tuition reimbursement, flexible spending accounts, and even free gym memberships.

Employees who work full time generally get more benefits than those who work part time. For example, full-time workers usually get health insurance, dental coverage and retirement plans. They also get paid sick leave and paid vacations. In contrast, part-time workers often don’t have access to these benefits.

If you are a recent graduate looking for a job, it is important that you understand what your employer offers in terms of benefits. This will help you decide if the company is right for you. You can find out about your employer’s benefits by checking with HR or asking your current boss. 

Health Insurance

The Affordable Care Act (ACA) requires most employers to offer health insurance coverage to employees working 30 hours or more per week. This requirement applies to businesses with 50 or more workers, including self-employed individuals who work at least half the year. Smaller companies may choose to provide insurance through another means, such as purchasing group plans offered by large corporations.

Some employers offer health insurance to all full-time employees. Others offer only part-time employees health insurance. If you are not sure whether your employer provides health insurance, ask your manager or human resources representative. 

Life Insurance

The average cost of life insurance coverage for recent grads is $1,000 per month. This figure includes premiums, taxes, and fees. If you want to save money, consider buying term life insurance instead. Term policies typically cost less than permanent policies, but they don’t provide any death benefit if you die during the policy period.

A lot of people think that they can’t afford health care because they don’t earn enough money. But the truth is that most employers offer some form of health insurance plan, which means that you can always find affordable coverage.  

Retirement Programs

The average cost of living in San Francisco is $4,000 per month, which means that if you want to live comfortably, you’ll need at least $50,000 saved by age 65. If you’ve already started saving, great! But if not, here are some tips to help you save for retirement.

You can start contributing to an IRA account when you first begin working. As long as you meet certain requirements, you can contribute up to $5,500 each year ($6,500 if you are over 50). If you make too much money to qualify for this amount, you can still contribute to an IRA through payroll deduction.

Another option is to open a Roth IRA account. Unlike traditional IRAs, Roth IRAs allow you to withdraw tax-free income from the account after you retire. However, you must pay income taxes on earnings withdrawn before age 59½. 

Direct Deposit

If you’ve recently graduated from college, you may qualify for direct deposit into your new job. The IRS allows employers to pay employees through direct deposit if they meet certain requirements. For example, the employee must be paid biweekly and have earned at least $600 in wages during the prior calendar quarter.

To learn more about how to get direct deposit set up, contact your human resources department or visit https://blog.hirenest.com/workplace-benefits-for-recent-grads/

Employee Education

The first step is to understand what it takes to become a successful entrepreneur. It requires hard work, dedication, and perseverance. If you want to start a business, you must be willing to invest your time and money into it. This means that you will need to spend at least $10,000 to start a new business.

In addition, you should also know that starting a business is not easy. You’ll face many challenges along the way, so you’ll need to prepare yourself for them. To do this, read books and articles related to entrepreneurship. Also, talk to other entrepreneurs and attend networking events. These activities will give you valuable insight into the world of small business ownership.

When you graduate, you’ll likely receive a diploma or certificate. In order to build your professional network, you might want to consider attending conferences and participating in online forums. By doing these things, you’ll gain valuable experience and develop relationships with professionals who can help you succeed.

Business owners often struggle with finding qualified salespeople. They try everything from advertising in local newspapers to hiring friends and relatives. While these methods can produce results, they aren’t very effective. 

Conclusion

Workplace benefits are one of the most important factors when choosing where to work. They help employees feel valued and secure about their future with the company. In addition to offering competitive salaries and benefits, employers should also offer training programs and mentorship opportunities. These programs allow new hires to learn the ropes quickly and become productive members of the team right away. If you want to know more about the Best Workplace Benefits for Recent Grads to Offer, read this article: https://blog.hirenest.com/workplace-benefits-for-recent-grads/

[taxreliefrus]

ABOVE-THE-LINE EDUCATION TAX DEDUCTION REINSTATED

Looking back a few years, a taxpayer who had higher education expenses could generally take advantage of four* possible tax benefits: an itemized deduction if the education was job-related, a higher education tuition and expenses tax credit using either the American Opportunity Tax Credit (AOTC) or the Lifetime Learning Tax Credit (LLC), or an above-the-line deduction for higher education tuition and fees. However, the 2017 tax reforms did away with the itemized deduction through 2025, and Congress allowed the above-the-line deduction for higher education tuition and fees to expire at the end of 2017, leaving only the two education credits as options. As part of the Appropriations Act of 2020, Congress has retroactively reinstated the above-the-line deduction for 2018 through 2020. For purposes of the higher education expense deduction, "qualified tuition and related expenses" generally has the same definition, with certain exceptions, as the AOTC and LLC use for higher education expenses, including tuition and fees paid for an eligible student attending school at an eligible higher education institution. The deduction can be claimed for the taxpayer, the taxpayer’s spouse or a dependent of the taxpayer for attending an eligible higher education institution. The deduction, up to $2,000 or $4,000 depending on adjusted gross income (AGI), is not allowed for joint filers with an AGI of $160,000 or more ($80,000 for other filing statuses, although no credit is allowed for taxpayers using the married filing separate status). These phase-out amounts are not inflation-adjusted. Thus, taxpayers now have three* optional tax benefits for post-secondary education expenses, and the rules related to each are different. Although one of the education tax credits will generally provide the greatest benefit, deciding which option is best can sometimes be complex. Each has a different AGI phase-out limitation, and the AOTC, besides only applying to the first 4 years of post-secondary education, has an additional half-time student requirement. The above-the-line deduction, on the other hand, reduces AGI, and because AGI often limits other benefits on a tax return, the effect of a lowered AGI on other elements of the return needs to be considered. If you have questions related to the extended above-the-line education deduction, please give this office a call. *There is actually an additional possibility for self-employed individuals who have business-related education expenses. These costs may be claimed as a business expense in lieu of an education credit or the personal above-the-line deduction.

Contact Us -

Address - 147-08 235 Street Rosedale, NY 11422

Phone -  (844) 829-2292

Email - info@taxreliefrus.com

Website - Tax Relief R Us

Blog - ABOVE-THE-LINE EDUCATION TAX DEDUCTION REINSTATED

[ala18b-town]

Make space on your calendar for INDIANA MILITARY VETERANS LEGISLATIVE DAY! Here’s a few focus items for that the Military - Veterans Coalition of Indiana 2022 is focusing on: ​ 1. State Reserve Tuition Supplement Program. IC21-14-4. Synopsis: SECTION 1. Create a Reserve Tuition Supplement Program to match the existing National Guard Tuition Supplement Program within existing state tuition supplement programs. SECTION 2. Require applicants to take the CLEP test (through the military) prior to applicants attendance at state institute of higher education. 2. Disabled Veteran Children Higher Education Assistance Matters. IC21-14-4 . Synopsis: Provide children of all service connected disabled veterans full remission of fees at any State supported post secondary school or university in the State of Indiana. 3. Renter Credit for Disabled Veteran. IC 6-3-2-6 Synopsis: Deduction; rent payments. Provide a renter credit for a disabled veteran who would qualify for the property tax credit for disabled veterans except for the fact that the disabled veteran rents living quarters. 4. Individually Unemployable Veterans Property Tax Synopsis: Property Tax Exemption at 100% rate for veterans who are classified as individually unemployable by the federal Department of Veterans Affairs regardless of their service connected disability rating. 5. Disabled Veteran’s Property Tax Matter Synopsis: Remove the property value limitation for a disabled vet to receive a property tax reduction. 6. Guard and Reserve Employer tax abatement credits. IC 6-3.1. Synopsis: Provide Employer tax abatement credits as a means to help offset costs associated with employees' Guard or Reserve activities and reinforce employer support. Talk to your elected officials so they know what VETERANS need! https://www.instagram.com/p/CXXswVcgYty/?utm_medium=tumblr

[accountantsau]

Professional Individual Tax Preparation Services to Benefit Commoners and Businesses

People often opt for professional individual tax preparation services to enjoy the tax benefits. When registering tax returns approaches, people often waddle through records and fill out their tax return in a hassle. However, there is no denying that it is a daunting task. The process is frustrating and can eat up more hours than an amateur initially plans to devote to it. 

A General Overview on Tax Benefits 

Specialised tax return accountants often use big terms with tax benefits. Exclusions, credits, deductions are some of them. However, the most significant aspect is the ability to reduce tax bills. The term’ tax benefits’ essentially refers to tax laws that offer the opportunity of reducing the bills upon qualifying specific eligibility requirements. The amount of tax saved commonly depends on the type of benefit one claims (there are various forms of savings). 

Tax benefits are usually derived in numerous ways – credit, deductions, and exclusions. The deduction is the most common type of benefit derived from these services. Upon claiming a deduction, it curbs the amount of income subjected to tax. The lowered amount that the individual is eligible for corresponds to the reduction in taxable income. Frequently claimed deductions usually cover the expenses on tuition and cost fees, charitable contributions, medical expenses, and state income taxes. 

Exclusion from tax offers the ultimate benefit since the income never ends up on the tax return. Even if it occurs, it generally turns up from another section of the return. The concerned benefit renders specific income variants tax-free. Foreign earned income exclusion is one of the most significant exclusions available to taxpayers. Contrary to deductions, exclusions are not subjected to reductions or limitations – the claimer either meets the requirement or doesn’t. 

Tax credit generally offers relatively significant tax savings than deductions. The former offers dollar-for-dollar reductions in income tax amounts that the claimants owe rather than merely curtailing value subjected to tax. The credits usually exist for an extensive range of expenses, such as installing energy-efficient equipment or college tuition. 

Essentiality of Proper Tax Preparation 

Every business and individuals need to pay taxes. Upon working with professionals who possess an elaborate background in business tax preparation, service seekers get to take a step ahead. Assistance from professionals helps ease unnecessary worries during the tax time while saving money and time. 

To conclude, business and individual tax preparation often prove to be a hectic and stressful time. Tax preparation in a timely and correct fashion is of utmost importance due to the company’s financial future. 

Source

[atomictyphoonpersona]

Financial Aid Questions

Just about everyone qualifies for some type of financial aid. In fact, over 8 million consolidate private student loan receive financial aid every year. Even if you’re not a straight-A student or a star athlete, you may be eligible for more aid than you think. To see if you meet basic eligibility requirements, take our Financial Aid Eligibility Quiz. Then, complete the Free Application for Federal Student Aid to see how much aid you can get. When do I start the process? What is FAFSA and where do I find it? How can I increase my chances of getting more aid? How do I get the money? How do I know if I’m a dependent student? Which loans require credit checks? When do I start repayment of my loans?

Student Loan Consolidation FAQs and Responses

Why should I consolidate my student loans? Consolidating student loans offers many benefits-even if you’re currently making your monthly student loan payments without any difficulty. You can make monthly bill paying easier with one student loan payment to one lender. The rate on a federal loan is fixed for the life of the loan. Federal student loans and parent loans issued prior to July 1 2006, carry variable interest rates that are adjusted annually. Consolidating can help ease the pressure on your monthly budget by reducing your monthly student loan payment by 10% – 60%. You can save money by using your student loan payment savings to pay off high-rate debt, such as credit cards. Consolidation will help your credit scores and debt-to-income ratio, both key factors if you’re looking to qualify for a credit card, buy a car, rent an apartment, or purchase or refinance a home. Won’t my total cost increase if I extend repayment to 30 years? Can my parents consolidate their federal parent loans with my student loans? How is the interest rate determined? Is the interest tax deductible? How do I know what my payment will be? How do I apply?

Stafford Loan FAQs and Responses

What’s the difference between subsidized and unsubsidized Stafford loans? It’s all about financial need.Subsidized Stafford student loans are awarded to students with demonstrated financial need. While students are in school, Uncle Sam pays the interest on subsidized Stafford loans, and payment is deferred (delayed) until after graduation. Once out of school, though, the student assumes responsibility for the loan, including interest.With unsubsidized Stafford student loans, you’re responsible for the interest from the time funds are disbursed. Unsubsidized federal college loans are not based on financial need; in fact, virtually every student is eligible for an unsubsidized Stafford loan. Although interest starts to accrue immediately, you can delay repayment until after graduation. How much money can I get with a federal Stafford student loan? What if it isn’t enough? How are loan funds disbursed? What is the interest rate? How do I apply for a Stafford loan?

Private Student Loan FAQs and Responses

What’s the difference between federal and private student loans? Federal student loans are guaranteed by the federal government, and offer attractive terms such as low fixed interest rates, deferred repayment, subsidized interest payments (for student who demonstrate financial need), and flexible repayment terms. Neither Stafford student loans nor Perkins student loans require a credit check or co-signer. The credit checks for PLUS parent loans and Grad PLUS graduate student loans are modest, much less stringent than for private student loans and other types of consumer loans. You must complete the FAFSA (the Free Application for Federal Student Aid) in order to be eligible for federal education loans.Private student loans are non-government loans offered by banks, credit unions, and other private lenders. These loans are not based on financial need but rather on your creditworthiness and ability to repay. Private student loans are designed to supplement federal loan programs and can be used for a wide range of education purposes, including tuition, books, living expenses, and a computer. The rates and terms for private student loans vary by lender and borrower creditworthiness. If you don’t qualify for a private student loan on your own, you may need to get a co-signer. Do I need a co-signer for a private student loan? What are the rates for private student loans? What is TERI? How do I apply for a private student loan?

Parents’ FrequentlyAsked Questions and Responses

How much should I save for my child’s education? How much you need to save depends on the school your child attends. Tuition and fees at public colleges are generally lower than those at private schools. Regardless of the school, though, education costs have been rising, and are expected to continue increasing over the next decade.Here’s how much college funding you’ll need to save to send one child to an average four-year private or public college. Don’t let these numbers frighten you. Start implementing your college savings plans today.

This article has written by Miss Money Belle

[orbemnews]

Tax Day is Monday. Here's everything you need to know about filing your 2020 taxes Next Monday, May 17, is the official deadline for individuals to file their 2020 federal tax return, and in most instances their state tax return, too. It’s a month later than usual, thanks to the pandemic. But the filing deadline’s not the only thing that’s changed. Many of the upheavals over the past year have caused other changes to your taxes. Due to the Covid crisis, there are plenty of new and revised provisions and important dates you will need to know about before filing your return this year. Here are some of the most important ones. While the original filing and payment due date was April 15, the IRS has pushed the deadline to May 17 to give individual filers, tax preparers and the IRS itself more time to sort through the many changes affecting one’s 2020 taxes from the latest Covid relief package. As it is, the filing season started a few weeks late this year since the IRS had its hands full administering provisions, like stimulus checks, from prior Covid relief packages. Unless you choose to file for an extension (see question below) you must file and pay any remaining federal income taxes you owe for 2020 by May 17. That way, you will avoid being hit with any potential late filing or late payment penalties. But if you do miss your filing or payment deadlines, you may be eligible for first-time penalty relief. There are two exceptions to the new extended federal deadline. The first applies to anyone who pays estimated taxes, including many small businesses. Your usual April 15 payment was still due on April 15. The second applies to anyone living in Texas, Oklahoma and Louisiana, who were hit hard by the February storms. The IRS extended the federal tax deadline for residents in those states to June 15. Do I also get more time to file my state taxes then? In most instances. Even though the IRS extended the federal filing deadline, it was up to individual states to set their own tax deadlines. And most have extended their filing deadlines to May 17 to align with the federal schedule. They include Alabama, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Vermont, Virginia, West Virginia and Wisconsin. Some states’ filing dates differ. They are Hawaii, April 20; Iowa, June 1; Maryland, July 15; and Oklahoma June 15, although technically that only applies to tax payments, whereas returns still had to be filed by April 15. In Louisiana, the deadline is May 17, although residents living in federally declared disaster areas due to the February winter storm have until June 15. Do I get more time to make contributions to my IRA and Health Savings Account? Yes. You now have until May 17 to make 2020 contributions to your IRA, Roth IRA, Health Savings Account, Archer Medical Savings Account (Archer MSA), and Coverdell Education Savings Account (Coverdell ESA). Can I file for an extension to file my 2020 return? Yes. You may get an automatic five-month extension to file your 2020 federal income taxes, meaning they won’t be due until October 15. To do so, submit your request to the IRS by May 17. But note that an extension to file is not an extension to pay what you owe. You still must pay any remaining federal taxes owed on your 2020 income by May 17, if you want to avoid a potential late payment penalty. And if you’re owed a refund, taking longer to file your taxes means you will wait longer to get your refund. When can I expect my refund? Typically refunds are issued within 21 calendar days of the IRS receiving your return. The fastest way for you to receive yours is to file electronically and choose direct deposit, the IRS notes. But this year, there is an unusually large backlog of returns to be processed both from 2019 and 2020. As of April 22, there were more than 29 million returns being held for manual processing, according to National Taxpayer Advocate Erin Collins. So any refunds from that batch are likely to be delayed. The IRS also has said it is taking longer to process mailed documents, such as paper tax returns, and correspondence related to one’s tax return — for instance, if the IRS requested more information or found an error in a filer’s calculations. IRS Commissioner Rettig told lawmakers on April 13 that any returns going through the agency’s error resolution service are taking 10 to 14 days to process, up from the typical three to five days in a normal filing season. To find out if your refund is being processed, you can check the IRS tool “Where’s My Refund?” either within 24 hours of when the agency indicates it has received your e-filed return or four weeks after you mailed in your paper return. But note the tool will not tell you if the IRS needs more information from you or when it plans to release your refund, Collins noted in a blog post. Are my stimulus payments taxable? No. The money is tax-free. But some people who are eligible for the money didn’t receive the first two rounds of payments — primarily those whose 2019 income was higher than their 2020 income or people who did not file tax returns for 2019 or 2018. They will be able to receive the money owed them via their federal tax return so long as they claim the refundable Recovery Rebate Credit. That credit will reduce your income tax liability dollar-for-dollar. And to the extent the credit exceeds your tax liability, you’ll get the remainder as a refund. For more, see here and here. Are my unemployment benefits taxable? Yes, but for households with modified adjusted gross income below $150,000 last year, the first $10,200 in unemployment benefits for each taxpayer in a household will be exempt from federal income tax, thanks to a provision in the latest Covid relief package signed into law by President Joe Biden. Also, when figuring out whether you are eligible for the $10,200 exclusion, you do not have to count any income from your unemployment benefits as part of your calculations of modified AGI, according to Mark Luscombe, principal federal tax analyst at Wolters Kluwer Tax & Accounting. For anyone who filed their tax return before the latest Covid relief package went into effect in mid-March, the IRS said there is no need to file an amended return unless the exclusion would make you newly eligible for more tax credits and deductions that were not claimed on your original return. Otherwise, the agency said it will refigure your taxes by incorporating the $10,200 exclusion and either refund you any resulting overpayment or apply it to other taxes you owe. Of course, if you live in a state with an income tax that also taxed unemployment compensation, you also should check your state revenue department’s web site to see if your state has decided to follow the IRS and exclude the first $10,200 from state income tax as well. Whether or not you qualify for the $10,200 exclusion, note that most unemployment compensation is treated as taxable income, both by the IRS and by most states. (The exceptions are Alabama, Alaska, California, Florida, Montana, Nevada, New Hampshire, New Jersey, Pennsylvania, South Dakota, Tennessee, Texas, Virginia, Washington, Wisconsin and Wyoming.) If you didn’t opt to have any income tax withheld from your unemployment payments during the year, the full tax bite will be assessed when you file your return. But if your 2020 income was very low because you didn’t work for a big chunk of last year, it’s unlikely you will have to cut a check to the tax man. Instead, you will see your federal and state refunds reduced by whatever income taxes you owe on your jobless benefits. What other new pandemic-related tax changes should I know about? Congress made a number of changes to tax benefits, such as tweaking the rules to make the Earned Income Tax Credit more generous, or creating new ones for individuals and small business owners to provide pandemic relief. Small business owners who received a tax-free, forgiven loan from the Paycheck Protection Program may still deduct the businesses expenses they paid for with their loan money. Eligible self-employed people may claim a new sick leave and family leave tax credit that was created by the Families First Coronavirus Response Act. And lastly, individuals who take the standard deduction may now take a new charitable deduction even though they are not itemizing. Keep in mind, the deduction can only be taken for contributions made to an IRS-designated charitable organization known as a 501(c)(3), which would rule out many of the online fundraisers for individuals or businesses struggling during the Covid crisis. Are there any new tax breaks for students? Yes. The IRS has advised that if you received any pandemic-related emergency financial aid grants in 2020 you do not have to include that money in your gross income calculation. Also, even if you used any part of those grants for qualified tuition and related expenses in 2020, you still may be eligible to claim a tuition and fees deduction, the American Opportunity Credit or the Lifetime Learning Credit on your return. Source link Orbem News #2020taxes:Everythingyouneedtoknowaboutfilingthisyear-CNN #Day #Filing #Heres #Monday #success #Tax #Taxes

[taxreliefrus]

TAX BREAKS FOR HIGHER EDUCATION

Over the years, Congress has continued to enhance tax breaks for students and their parents. These tax benefits provide taxpayers with a large number of options for tax-favored financing of their education and the education of their family members. This brochure highlights the various education benefits included within the U.S. income tax system.

Coverdell Education Savings Account (Education IRA)

Qualified State Tuition Program

American Opportunity Credit

Lifetime Learning Credit

Penalty-Free IRA Withdrawals for Education Purposes

Deduction for Education Loan Interest

Tax-Free Savings Bond Interest

Student aid is available from the Department of Education for students of limited means. The aid can include educational grants such as a “Pell” grant or various types of student and parent educational loans. Planning and saving for future education can limit or eliminate potential student aid, because these resources will be taken into consideration at the time the need for student aid is determined.

Understanding the tax terms: You will encounter several tax terms in this brochure that may be unfamiliar to you. Understanding their full meaning will help give you a better picture of the limits, qualifications, and restrictions that apply to the benefits for education.

Phase Out... Instead of just eliminating certain deductions and credits, the tax law often decreases them gradually to zero (“phases them out”) over a specific income range. For example, say a hypothetical $1,000 deduction is allowed, but “phases out” when a taxpayer’s “modified adjusted gross income (AGI)” is between $40,000 and $60,000. A taxpayer with a modified AGI of $40,000 or less will be allowed the full $1,000 deduction, while the taxpayer with a modified AGI of $60,000 or more would get no deduction. For modified AGIs between $40,000 and $60,000, the taxpayer would be allowed a pro-rated deduction amount.

Regular AGI and Modified AGI... AGI is the abbreviation for “adjusted gross income.” “Regular AGI” is the total of all income, allowable losses, and adjustments before subtracting itemized or standard deductions and, for years other than 2018 through 2025, personal exemptions. However, several tax benefits described in this brochure are limited or not available to taxpayers whose so-called “modified AGI” is too high. Generally, the modified AGI for educational benefits adds back certain amounts from foreign, U.S. Possession, and Puerto Rican sources that are excluded from income.

Qualified Educational Institutions... These Institutions are generally accredited, post-secondary educational institutions that offer credit toward a bachelor’s degree, an associate’s degree, or some other recognized post-secondary credential. Certain proprietary institutions and post-secondary vocational institutions also qualify if they are eligible to participate in Department of Education student aid programs.

Coverdell Education Savings Account

Originally referred to as an Education IRA, the Coverdell Education Savings Account is actually a nondeductible education savings account. The investment earnings from this account accrue and are withdrawn tax-free if the proceeds are used to pay qualified education expenses of the account beneficiary.

Contributions are only allowed for designated beneficiaries under the age of 18 and the allowable nondeductible contribution is $2,000 per year per beneficiary.

The annual contribution limit is gradually reduced if the contributing taxpayer’s “modified AGI” is within the phase-out range and eliminated for taxpayers above the range, which for married taxpayers filing jointly is $190,000 – $220,000 and $95,000 – $110,000 for single taxpayers. Unlike phase-outs for many other tax benefits, these amounts are not adjusted annually for inflation and have not changed since 2002.

Anyone is allowed to make the contribution provided the total contribution for the under 18 beneficiary does not exceed the annual contribution limit and the contributing taxpayer’s AGI is within limits. If the AGI limits the contribution, the funds can be gifted to someone else whose contribution would not be AGI limited, even the beneficiary.

Distributions from the Coverdell Education Savings Account are tax- and penalty-free (including interest on the account) if they are used to pay for qualified education expenses of the designated beneficiary or a member of the beneficiary’s family. The definition of qualified education expenses includes elementary or secondary education, kindergarten through grade 12, as well as post-secondary education.

Because of the phase-out provision for contributions, taxpayers cannot always be sure they can contribute to the accounts. Recognizing this problem, the tax law permits Coverdell contributions to be made after the close of the tax year for which the contribution is being made and before the April 15 filing due date for that year. (Note: if the April 15 due date falls on a Saturday, Sunday or holiday, the due date is the next business day.)

Additional rules apply for dealing with rollovers, changes in designated beneficiaries, death of taxpayer or beneficiary, excess contributions, special needs beneficiaries, and unauthorized use of distributions.

Qualified State Tuition Programs

A qualified state tuition program is one generally set up by a state or state instrumentality that lets individuals make contributions to an account established for a designated beneficiary’s higher education.

Unlike the Coverdell Education Savings Account, there is no limit on the annual contributions to Qualified State Tuition programs. However, contributions to these plans are considered gifts to the beneficiary, making the annual gift exclusion amount the practical annual limit per contributor. The annual gift exclusion amount is inflation-adjusted periodically and is $15,000 for 2019; please call this office for the limit for other years. A special rule allows a donor who makes total contributions exceeding the annual gift limit to elect to take the contributions into account ratably over a five-year period, starting with the year of the contribution. This allows a donor to contribute as much as $75,000 (2019) in one year, while avoiding the gift tax implications. The donor must file a gift tax return for the year of the contribution, and a five-year election must be made on the return. Care should be exercised in determining the total contributed to any individual’s account to avoid nonqualified distributions if the amount exceeds the educational needs.

Virtually all of the high population states now have these programs, which are professionally managed and tailor the investments and risk potential to the prospective student’s current age. Individuals are not restricted to using the program established in their home state but instead can pick and choose among the programs of any of the states that have established programs.

A major benefit of these programs is that the distributions of earnings from the programs can be excluded from income if used for qualified education expenses. This puts the Qualified State Tuition Programs on par with Coverdell Education Savings Accounts, but without the annual contribution limit. However, unlike Coverdell plans that allow tax-free distributions to pay for grades K-12 expenses, distributions through 2017 from QSTPs were only used for post secondary education expenses.

For years after 2017, tax reform added withdrawals for elementary or secondary school tuition expenses but limits the annual withdrawal for each beneficiary to $10,000 (regardless of the number of 529 plans in the beneficiary’s name). This special $10,000 amount applies for tuition paid to public, private or religious schools.

Additional rules apply for designated beneficiaries, death of taxpayer or beneficiary, and unauthorized use of distributions.

Penalty-Free IRA Withdrawals

Generally, when funds are withdrawn from an IRA before a taxpayer reaches age 59, a 10% early withdrawal penalty applies to the distribution. However, penalty-free IRA withdrawals are permitted if the funds are used to pay qualified higher education expenses. The withdrawals will still be subject to regular income tax.

Qualified “higher education expenses” include tuition at a qualified educational institution, as well as related room, board, fees, books, supplies, and equipment. The expenses can be for the taxpayer, his or her spouse, or taxpayer’s or spouse’s children and grandchildren.

Deduction for Interest

Generally taxpayers can only deduct home mortgage interest, investment interest, and business interest. However, interest paid on student loans used to pay tuition, room and board, and related expenses for qualified higher education is deductible even if the taxpayer uses the standard deduction. The amount annually deductible is limited to $2,500.

Note: Student loan interest is not limited to government student loans and could be home equity loans, credit card debt, etc., provided the debt was incurred solely to pay qualified higher education expenses.

The annual deduction begins to phase out when modified AGI reaches the threshold amount and is fully phased out when the modified AGI reaches the top of the phase-out range. The phase-out ranges are inflation adjusted in $5,000 increments. For example, the 2019 range is between $70,000 and $85,000 for single taxpayers and between $140,000 and $170,000 for joint return filers. Please call this office for other years’ phase-out levels.

Education Tax Credits

The law provides for two tax credits, the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit, as explained later. Both credits will reduce a taxpayer’s tax liability dollar for dollar until the tax reaches zero. Credit in excess of the tax liability is lost for the Lifetime Learning Credit, but 40% of the AOTC may be refundable.

The credit is not allowed for taxpayers who file married separate returns. The credits are elective, and the taxpayer must choose between the two credits for each student. In general, most taxpayers will find the American Opportunity Credit to be more beneficial in the initial years of college and then the Lifetime Credit for subsequent education.

The American Opportunity and Lifetime credits phase out when a taxpayer’s modified AGI reaches a threshold amount and is fully phased out when the modified AGI reaches the top of the phase-out range. The phase-out amounts for 2019 for the Lifetime Credit , which are annually adjusted for inflation, are between $58,000 and $68,000 for unmarried taxpayers and $116,000 to $136,000 for jointly filing couples. The phase-out ranges for the American Opportunity Credit are fixed at $80,000 to $90,000 ($160,000 – $180,000 for a joint return). Please call this office for the Lifetime Learning Credit phase-out levels after 2019.

American Opportunity Tax Credit

The American Opportunity Tax Credit provides a credit for four years of college expenses, and the maximum credit per student is $2,500 per year. The credit is based on 100% of the first $2,000, and 25% of the next $2,000, of tuition, fees and course material (including books) expenses paid during the tax year. 40% of the credit is refundable, provided the taxpayer is not: (1) a child under the age of 18 or (2) under the age of 24, a full-time student and not self-supporting. As noted above, this credit begins to phase out for AGI in excess of $80,000 ($160,000 for married couples filing jointly). This credit can be used to offset the alternative minimum tax.

Lifetime Learning Credit

The Lifetime Learning Credit is a credit of up to 20% of the first $10,000 of qualifying educational expenses for: (1) undergraduate, graduate, or certificate level courses for a student attending classes on at least a half-time basis; or (2) any course at an eligible institution to acquire or improve job skills of the student (no attendance time requirements).

Example: A taxpayer has two children attending college on a full-time basis. The taxpayer pays qualified tuition expenses for the two children in the amount of $12,000, and there is no reimbursement or other tax benefit claimed for the tuition expense. Under the Lifetime Learning Credit rules, the taxpayer is entitled to a tax credit of $2,000 (20% of the first $10,000) for the tax year.

Qualifying expenses... for these credits include tuition and fees but not expenses for room, board, books, and other nonacademic fees such as student activity, athletic, insurance, etc. Also excluded are expenses for courses that involve sports, games, or hobbies that are not part of a degree program. Expenses qualifying for the credit must be reduced by tax-free scholarships or fellowships and other tax-free educational benefits. For years after 2015, books, supplies and equipment required for enrollment or attendance at an eligible institution are allowable expenses for the American Opportunity Tax Credit.

Qualifying students... must attend a qualified educational institution (one that is eligible to participate in U.S. Dept. of Education student aid programs). The student must be the taxpayer, his or her spouse, or someone who is a dependent of the taxpayer. In addition, in the case of the American Opportunity Credit, the student must have no federal or state felony drug convictions for the academic period to which the credit would apply.

Savings Bonds Interest Exclusion

Interest earned on U.S. savings bonds is, by federal law, excludable from taxation for state income tax purposes but taxable on the federal return. However, for certain savings bonds, an individual can even exclude the interest on the federal return. To qualify for this Federal exclusion, the bonds must be Series EE U.S. savings bonds issued after 1989, or Series I Bonds, and the bond proceeds must be used to pay higher education expenses.

Other qualifications... The bond purchaser must be age 24 or over and must be the sole owner of the bond (or, if married, joint owner with a spouse). Bonds purchased by others (except the spouse) or purchased by the taxpayer and placed in another’s name do not qualify for the exclusion.

Redemption of bonds... When the bonds are redeemed, the interest earned is excludable from income to the extent the proceeds are used to pay qualified higher education expenses for the taxpayer, spouse, or any dependent of the taxpayer. Such expenses include tuition and fees but not room and board or courses involving sports, etc., that aren’t part of a degree program.

Phase out... Like so many of the other education benefits described earlier in this brochure, the interest exclusion phases out when modified AGI is between certain inflation-adjusted limits. For 2019, the phase-out occurs between $81,100 and $96,100 for single taxpayers and between $121,600 and $151,600 for married taxpayers filing joint returns. For phase-out levels for other years, please call this office.

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