Just in case you were harboring the misconception that handling education income and expenses on your 1040 was no big deal, here’s just some of the rules and policies we monitor for this topic when preparing taxes. 😂 It’s a lot!
The good news is that the government recognizes several different tax breaks for students and parents that might save you thousands of dollars. One example is the American Opportunity Tax Credit (AOTC) which allows a claim of up to $2,500 per student depending on what expenses the student incurred. Depending on how many students you are claiming on a tax return, that could add up rather quickly.
Spending a little more time throughout the year to carefully record your expenses and file away those receipts can save you both time and money when it’s time to pay the IRS. This way no qualified expenses slip through the cracks, and you have the paperwork to support your claim to the tax collectors.
Some of the most common expenses we see on taxes involving students are:
- Enrollment and Student Fees
- Books, Materials, and Supplies
- Room & Board
- Computers, Software, and Related Tools
Whether or not the expenses actually qualify for the tax breaks will depend on a large number of factors ranging from which opportunity you are claiming to how you paid for the cost. In any case, you should keep detailed records of all expenses and maintain a folder with the receipts for evidence.
If you are looking for a place to start, check out the Student Expenses Log below.
Disclaimer: Nothing in this article is to be relied upon as legal advice. Every individual faces a unique situation and requires personalized and targeted professional and legal assistance. If you are looking for advice, speak with a professional and find what applies directly to you. Blessing Associates is not liable for any results that arise should you rely solely upon information in this article.