Bulletins

Top Five Education Deductions

by Susan E. St. Range, CPA - Senior Staff Accountant

To Our Clients and Friends

September is the month we turn our focus back to school and education. If you have a child heading off to college, don't miss out on these five education related tax benefits:

1. American Opportunity Tax Credit � 2012 is the final year to use this credit. It has NOT been renewed for 2013, so far. Maximum credit equals $2,500 (100% of qualifying expenses no in excess of $2,000, plus 25% of qualifying expenses in excess of $2000, but not in excess of $4,000). Partially refundable (40%). Allowable for first 4 years of post-secondary education. Qualifying expenses are tuition, fees, and course materials.

2. Hope Credit � Allowed for first 2 years of post-secondary education. 2012 credit was replaced with American Opportunity Tax Credit. The Hope Credit will be reinstated for 2013, and rates and phase outs will be issued in October.

3. Lifetime learning credit � Qualifying expenses are tuition and fees only. For qualified individuals to acquire or improve job skills, and is available for undergraduate, graduate, or professional courses. Maximum credit is $2,000 per eligible taxpayer per year, and is non-refundable.

4. Student loan interest deduction � up to $2,500 per year. Still paying off student loans? Don�t forget this deduction on page one of your 1040!

5. Sec 529 plan contributions � It�s never too soon to start a college savings plan for your children or grandchildren. Section 529 plan distributions are excluded from the income of beneficiary and the contributor if used for qualified expenses (tuition, fees, books, supplies, equipment, and reasonable room and board). Another one of the many benefits of these plans is that Oregon�s Section 529 plan offers, for 2012, is a credit on your Oregon tax return of up to $4,345 MFJ, or $2,170 single.

The American Opportunity, Hope, and Lifetime Learning credits all have income phase outs. Whether you have children in college, paying off those student loans, or helping fund the grandchildren�s education, we can assist with planning, and answer your education related questions. Give us a call!

Very truly yours,

Susan E. St. Range, CPA