Summer is still here and the heat is still
beating down but across the country kids are headed back to school. Whether you
have children in pre-k or are sending kids off to college there are tax tips
and benefits that can help make "school" easier on parents (and students)
financially.
Back to school shopping can be a major expense. Many parents
spend backpacks full of money on school supplies and clothing to get their
children ready for another year behind a desk. With that being said many states
hold sales tax holidays to coincide with the start of school. These "holidays"
allow for purchases of school supplies and even clothing to be made tax free. A
list of these holidays by state can be found here.
If you missed the holiday this year make sure to mark it on your calendar for
next year as most of them recur on a yearly basis.
The majority of tax benefits for school pertain to college
students and/or their parents. College is expensive, there is no way around it,
but the IRS does its part to try to alleviate some of the financial burden. The
most valuable benefit for college tuition is the Hope Credit also known as the
American Opportunity Credit. If you qualify (there are certain requirements)
you can receive up to a $2500 tax credit and 40% of the credit may be refundable
straight back to you. Some parents and students are taking advantage of this
credit during the year by adjusting their withholdings to
reflect the anticipated amount of the credit.
If you are not in the first four years of your college
education you can still receive some benefit from either the Lifetime Learning
Credit or by taking a deduction for tuition expenses. Both of these can be very
valuable. For more information please click here to view IRS Publication
970.
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