Kids can be really expensive. The Agriculture Department revealed new numbers this week showing parents will likely spend at least $217,000 to raise a child born last year and that doesn't even include college. CPA Ebong Eka, with with Levyti Consulting, reminds parents about these available tax credits:
American Opportunity Tax Credit - Law Extend to Dec 31st, 2017
a. This credit can be up to $2,500 per eligible student.
b. For first 4 years of post high school education.
c. 40% the credit is refundable - means you can get back up to $1,000 of the credit as a refund, even if you don't owe any taxes.
d. Tuition, fees, books, supplies and equipment
Lifetime Learning Credit
a. Can get a tax credit up to $2,000 for qualified education expenses
b. No limit on the amount of years
c. You can claim only one type of education credit per student on your federal tax return each year.
d. You can use the IRS's Interactive Tax Assistant tool to help determine if you're eligible for these credits. The tool is available at IRS.gov<http://IRS.gov>.
A deduction for student loans
a. You may be able to deduct interest you pay on a qualified student loan. The deduction can reduce your taxable income by up to $2,500. You don't need to itemize deductions to claim it.
b. These education benefits are subject to income limitations and may be reduced or eliminated depending on your income.