There is a chill in the air here in Northwest Ohio which means fall is on its way. Many people like the cooler temperatures, but I personally prefer the heat. After all, we are still in August! With fall comes colder temperatures and I fear a repeat of our epic winter from last year! Needless to say, I guess the fall-like weather makes it more believable that it is back to school time. What does back to school mean for you and your taxes?
If you are a college student, or the parent of one, there are various deductions and credits available for tuition payments. There is a tuition and fees deduction which reduces the amount of income that is taxed. There are also two different types of tax credits, the American Opportunity tax credit and the Lifetime Learning credit. These two credits reduce the amount of tax you owe, potentially below zero, allowing you to get a refund of taxes you did not pay. There are various stipulations required to receive these deductions, all of which would need to be discussed with your accountant based on your individual circumstance. You will receive a form 1098-T at the end of the tax year that shows how much tuition you paid to the school for the current year. Also keep in mind that any additional fees paid or costs of courses, even the cost of books, can be included. These additional expenses are ones you would need to track yourself.
Many students today finance their way through college. If you are one of those students, you can also take a tax deduction for the student loan interest paid throughout the year.
If your children or grandchildren have college in their horizon, you can save on state taxes by contributing to a state 529 plan. You can contribute as much as you would like, however, only $2,000 per child per year in Ohio is available as a deduction to your taxable income. If you contribute more than $2,000 in a year, the remainder will carry-over to be a possible deduction in future years.
If you are an educator for grades Kindergarten through twelfth grade you are eligible for a $250 deduction on your return for unreimbursed education materials purchased in the year.
If you are a parent of a school-aged child and recently purchased school supplies, I am sure you wish there was some tax incentive. Unfortunately, you only have to look forward to paying college tuition before you can get a tax deduction!