by Devon Weaver, Keeping Tabs Accounting
Tips for Students and Parents Paying College Expenses
For each student, you can choose to claim only one
of the credits in a single tax year. However, if you pay
college expenses for two or more students in the same
year, you can choose to take credits on a per-student,
per-year basis. You can claim the American Opportunity
Credit for your sophomore daughter and the Lifetime
Learning Credit for your senior son.
You cannot claim the tuition and fees deduction for
the same student in the same year that you claim the
American Opportunity Credit or the Lifetime Learning
Credit. You must choose to either take the credit or the
deduction and should consider which is more beneficial
for you.
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Tips for Job Seekers
Page 41
Many taxpayers spend time during the summer months updating
their résumé and attending career fairs. Here are seven things
the IRS wants you to know about deducting costs related to your
job search.
• To qualify for a deduction, the expenses must be spent on a job
search in your current occupation. You may not deduct expenses
you incur while looking for a job in a new occupation.
• You can deduct employment and outplacement agency fees you
pay while looking for a job in your present occupation. If your
employer pays you back in a later year for employment agency fees,
you must include the amount you receive in your gross income, up
to the amount of your tax benefit in the earlier year.
• You can deduct amounts you spend for preparing and mailing
copies of your résumé to prospective employers as long as you are
looking for a new job in your present occupation.
• If you travel to an area to look for a new job in your present
occupation, you may be able to deduct travel expenses to and
from the area. You can only deduct the travel expenses if the trip
is primarily to look for a new job. The amount of time you spend
on personal activity compared to the amount of time you spend
looking for work is important in determining whether the trip is
primarily personal or is primarily to look for a new job.
•You cannot deduct job search expenses if there was a substantial
break between the end of your last job and the time you begin
looking for a new one.
• You cannot deduct job search expenses if you are looking for a
job for the first time.
• The amount of job search expenses that you can claim on your
tax return is limited. You can claim the amount that is more than 2
percent of your adjusted gross income. You figure your deduction
on Schedule A.
Phone: 260-463-4901 • Fax 888-439-6528 • The Hometown Treasure
Whether you’re a recent
graduate going to college for
the first time or a returning
student, it will soon be time to
get to campus – and payment deadlines for tuition and
other fees are not far behind. The Internal Revenue
Service reminds students or parents paying such expenses
to keep receipts and to be aware of some tax benefits that
can help offset college costs.
Typically, these benefits apply to you, your spouse
or a dependent for whom you claim an exemption on
your tax return.
• American Opportunity Credit This credit,
originally created under the American Recovery and
Reinvestment Act, has been extended for an additional
two years – 2011 and 2012. The credit can be up to $2,500
per eligible student and is available for the first four years
of post secondary education. Forty percent of this credit is
refundable, which means that you may be able to receive
up to $1,000, even if you owe no taxes. Qualified expenses
include tuition and fees, course related books, supplies
and equipment. The full credit is generally available to
eligible taxpayers whose modified adjusted gross income
is below $80,000 ($160,000 for married couples filing a
joint return).
• Lifetime Learning Credit In 2011, you may be
able to claim a Lifetime Learning Credit of up to $2,000
for qualified education expenses paid for a student
enrolled in eligible educational institutions. There is no
limit on the number of years you can claim the Lifetime
Learning Credit for an eligible student, but to claim the
credit, your modified adjusted gross income must be
below $60,000 ($120,000 if married filing jointly).
• Tuition and Fees Deduction This deduction
can reduce the amount of your income subject to tax
by up to $4,000 for 2011 even if you do not itemize your
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