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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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