Education Tax Credits For 2010

Education Tax Credits For 2010 – Tax time will be upon s all soon and there is no reason why you shouldn’t start the year by getting your returns in order and filing as soon as possible. It may be a little hassle but you absolutely must use all tax credits that you are entitled to. For 201o there are a few tax credits available for people in education so lets take a little look at them. Education Tax Credits For 2010 If you are paying for any form of education you can get a lot of help come tax time. One of the best ways to get some help is through one of the two tax credits available for education in 2010. Those credits are the the lifetime learning credit and the American opportunity credit. Depending on which one works out better for you or the person you are claiming for you can choose one of these credits on your 2010 tax return. So what do these credits do for you? Education Tax Credits For 2010 Here is what the IRS say about the lifetime learning credit: What is the tax benefit of the lifetime learning credit.  For the tax year, you may be able to claim a lifetime learning credit of up to $2,000 for qualified education expenses paid for all eligible students. There is no limit on the number of years the lifetime learning credit can be claimed for each student. A tax credit reduces the amount of income tax you may have to pay. Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself. The lifetime learning credit is a nonrefundable credit. This means that it can reduce your tax to zero, but if the credit is more than your tax the excess will not be refunded to you. Your allowable lifetime learning credit may be limited by the amount of your income and the amount of your tax. Who Can Claim the Credit Generally, you can claim the lifetime learning credit if all three of the following requirements are met. You pay qualified education expenses of higher education. You pay the education expenses for an eligible student. The eligible student is either yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. Here is what the IRS says about the American opportunity credit: What is the tax benefit of the American opportunity credit.  For the tax year, you may be able to claim an American opportunity credit of up to $2,500 for qualified education expenses paid for each eligible student. A tax credit reduces the amount of income tax you may have to pay. Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself. Forty percent of the American opportunity credit may be refundable. This means that if the refundable portion of your credit is more than your tax, the excess will be refunded to you. Your allowable American opportunity credit may be limited by the amount of your income. Also, the nonrefundable part of the credit may be limited by the amount of your tax. Who Can Claim the Credit Generally, you can claim the American opportunity credit if all three of the following requirements are met. You pay qualified education expenses of higher education. You pay the education expenses for an eligible student. The eligible student is either yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. Both credits can bring great tax savings to students and have their differences. Some of those include the fact that the American opportunity (previously Hope) can only be claimed for 4 years yet the lifetime learning credit can be claimed each and every yea, unless the credit is changed. You will also find that there are deductions related to student expenses, loans, scholarships, savings plans and more and all this information can be easily found over at the IRS’s page:  Publication 970 (2010), Tax Benefits for Education . I hope you are able to benefit from these tax credits. Related: Top-rated 529 education plans Thanks for reading - Education Tax Credits For 2010

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Education Tax Credits For 2010