Tax Credit Opportunities For College Expenses
When looking for assistance with your child's college expenses, depending on your income, you might consider the federal American Opportunity Tax Credit instead of withdrawing from a 529 plan.
If you are looking at a joint return with a modified adjusted gross income of up to $160,000, or up to $80,000 for single filers, you could be claiming up to 100% of the first $2000 you spend on tuition and other university costs. You could also claim 25% of the next $2000 spent, making it possible for your family to receive up to $2500.
However, bills paid from a 529 plan or a Coverdell savings account do not qualify for this credit. If your income fits, take advantage of the AOTC by limiting 529 plan withdrawals and paying up to $4000 from a qualified source instead.
The current plan is set to expire in 2017, accommodating for lower income thresholds but with less maximum credit for future expenses. Check with H&J Certified Public Accountants to learn more about the benefits of the AOTC.
Timothy Valentino - CPA, CVA
Tim has over 28 years of public accounting experience to bear on his clients' challenges. He is among our firm's best instructors and works often and successfully with clients' accounting staffs. Tim is a Certified Valuation Analyst (CVA) and is certified to perform business evaluations. Tim is a graduate of Miami University. Read More