If you are a current college student or recent graduate, you should claim any amount over $600 paid on the interest of your student loans. This helps to balance your budget into next year so you can pay your loans down further.
Looking into additional https://getbadcreditloan.com/payday-loans-pa/malvern/ tax credits or deductions can help you continue to pay down your student loans. If you are a parent and have at least one dependent child attending a college, university, or trade school, you can file for a tax credit to help you manage the financial support of your child.
As of 2019, there are two college tax credits offered by the Internal Revenue Service (IRS) that you can qualify for. This change stems from the Tax Cuts and Jobs Act (TCJA) of 2017 and the Bipartisan Budget Act of 2018. The latter extended the tuition and fees deductions in both college tax credits.
Current law states that you cannot claim both tax credits when you file your taxes, but if you qualify for one college tax credit, you can continue to claim your student loan deduction too. This involves Form 8863, which helps you calculate eligible school expenses.
The Two College Tax Credits Available to Students or Their Parents
Due to the recent changes in tax law, there are two college tax credits you can claim as a current college student or recent graduate paying down student loans.
American Opportunity Tax Credit (AOTC)
This was formerly called the Hope Scholarship Tax Credit. Changes to tax law have expanded this form of tax assistance, allowing more people to file for more money. In 2009, the well-known Hope Scholarship Tax Credit was expanded by Congress into the AOTC, providing a more general college tax credit.
The AOTC applies only during the first four years of postsecondary education at a college or university. Graduate school, certificate programs, and professional school do not count for the AOTC. Continue reading “Two College Tax Credits to Be Aware of in 2020”