CHICAGO (Reuters) – If you go to college, get additional training for a job, or pay off student loans, there are a myriad of tax breaks worth several thousand dollars for those burdened with the fees academics.
While many were threatened in early drafts of the tax bills crafted by the Senate and House and Representatives, students can breathe a sigh of relief that the benefits all remain. Tax experts suggest using these strategies before the end of December to get every penny possible:
* Deduction of interest on student loans
About 12.4 million borrowers use this deduction. You can deduct up to $ 2,500 in interest per year, which can translate into tax savings for some of the top $ 600.
The deduction depends on how much you paid in a single tax year for your student loans and also depends on your income.
If your loan repayments made so far for 2017 do not qualify for the maximum deduction of $ 2,500 and you are still paying off student loans, consider paying more before the end of the year to increase the deduction. deduction, said Mark Kantrowitz, editor of www.Cappex.com. You can find out the interest you have paid so far this year from the student loan manager who collects your monthly payments.
To qualify for the full deduction of $ 2,500, an individual cannot have a modified adjusted gross income greater than $ 65,000, and for couples, $ 135,000. For individuals with incomes up to $ 80,000 and for married couples earning up to $ 165,000, smaller deductions apply.
Paying extra by Dec.31 would be especially wise if your income for the next year is likely to push you over the income threshold, said Gil Charney, director of tax and policy analysis at the Fiscal Institute of Canada. H&R Block.
* College credits
The American Opportunity Credit and Lifetime Learning Credit both offer tax breaks to help pay for education, but apply at different stages.
For undergraduates, the US Opportunity Credit is worth up to $ 2,500 per year, but can only be used for the first four years of college. Students must attend at least part-time.
If you haven’t paid enough tuition and fees to qualify for full credit this year, and you’ve been billed for the first term or semester of 2018, consider paying the bill now to maximize your credit. 2017, Charney said. The credit covers 100 percent of the first $ 2,000 of tuition and fees paid in a year; then 25% of the next $ 2,000.
Remember that there are income limits. You cannot get the full credit with a modified adjusted gross income greater than $ 80,000; $ 160,000 for couples.
If your income exceeds the limit in 2018 but qualifies in 2017, this would be the year to capture as much as possible.
The same strategy applies to the Lifetime Learning Credit, which is invaluable for part-time students, graduate students, or workers trying to improve employment opportunities with an additional course or training.
The Lifetime Learning Credit is worth $ 2,000, or 20% of the first $ 10,000 spent in a year. So remember to pay in advance for your 2018 studies, especially if you are approaching an income threshold: more than $ 56,000 in adjusted gross income for individuals, or $ 112,000 for couples for the maximum credit.
Remember, if two spouses go to school, they cannot both claim the $ 2,000; this is a maximum per household. The US opportunity credit is nicer because it is applied per student. Parents with three children in college at the same time could claim the credit for each child and do so annually for the four years that a child is in an undergraduate program.
For more details, see IRS Publication 970
The views expressed here are those of the author, columnist for Reuters.
Editing by Beth Pinsker and Leslie Adler