Affordable and Experienced • Call Michael E. Plummer & Associates Today

Call 859-581-5516 , toll free at 877-790-2233 or e-mail our bankruptcy lawyers to discuss your situation.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

Please reload

Recent Posts

If a confirmed plan provides that the debtors will cure arrearages through the plan and maintain ongoing payments on a mortgage or long-term car loan,...

“I’ve Changed My Mind – I Want to Surrender My House”: What Effect Does Post-Confirmation Surrender Have on the Debtor’s Discharge?

August 24, 2016

1/1
Please reload

Featured Posts

Understanding Tax Credits and Student Loans

April 14, 2016

 

As the deadline to file your taxes approach, some of you might be wondering what kinds of tax credits you can claim with student loans. If you're currently in school with loans or a graduate paying off student loans, there are a few deductions you can make. Here's a simple guide to understanding what these tax credits mean.

Tax Credits for Current Students

If you are currently in school, there are two major tax credits that you can take advantage of in 2015: the American Opportunity Credit and the Lifetime Learning Credit. Note: you cannot claim these credits if you (the student) are claimed as a dependent.

 

The American Opportunity Tax Credit

Created to help students in their first 4 years of college, the American Opportunity Tax Credit (AOTC) provides a maximum annual credit of $2,500 per eligible student. A student is eligible for this credit if he or she:

  • is pursuing a degree or recognized education credential

  • is enrolled at least half-time in school for at least 1 academic period beginning in the tax year

  • has not finished his or her first four years of higher education at the beginning of the tax year

  • does not have a felony conviction at the end of the tax year

  • meets the modified adjusted gross income (MAGI) requirement of $80,000 or less

The AOTC can be claimed for up to four years of college education and no more. You can also receive an adjusted credit if your MAGI is more than $80,000 but less than $90,000. To claim the credit, you'll have to fill out Form 8863 and attach it to your Form 1040 or Form 1040A.

The Lifetime Learning Credit

The Lifetime Learning Credit is a federal tax benefit that allows you to claim up $2,000 in tax credit per return. To claim this credit, you or the student must:

  • be currently enrolled at an eligible educational institution

  • must be taking higher education level classes or classes that improve job skills

  • be enrolled for at least 1 academic period at the beginning of the tax year

This tax credit is available to anyone who is in any year of higher education classes (including those in a master's or doctorate track) and has no limit to the number of years you can claim this credit. However, you also must have a MAGI of less than $55,000 (single) or $110,000 if married or filing jointly. You can also receive an adjusted credit amount if your MAGI is between $55,000 - $65,000 (single) or between $110,000 - $130,000 (married or filing jointly).

 

Tax Deduction for Student Loan Interest Paid

If you're currently paying for your student loans (whether federal or private), you can deduct up to $2,500 in interest paid. It's also an above-the-line deduction, which is an advantage for those who do not itemize their taxes. To qualify for this deduction, you'll have to have a MAGI of less than $80,000 if single or $180,000 if married. 

 

However, you cannot make this deduction if you're claimed as a dependent. You also cannot claim a deduction for payments you made for someone else (like your spouse or child), but you can claim a deduction from the payments someone made on your behalf.

 

For all those filing with student loans, keep in mind that forgiveness tax rules might apply if you have a forgiven loan balance. These balances are usually seen as taxable income and therefore you must pay income tax on them during the forgiven tax year. 

 

As long as you meet the eligibility requirements for these 3 major tax credits, you can easily file them with your taxes. Just make sure that you are not disqualified as a dependent or if you're claiming a dependent. 

Please reload

Follow Us
Please reload

Search By Tags
Please reload

Archive
  • Facebook Basic Square
  • Twitter Basic Square
  • Google+ Basic Square