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College Expenses and Tax Benefits for Massachusetts Residents

The beginning of the school year is a good time for a reminder of the taxTax deductions.jpg benefits for education available to Massachusetts residents. These benefits can help offset qualifying education costs.

Here is information about two tax credits available to those who pay higher education costs for themselves, a spouse or a dependent.

The American Opportunity Tax Credit (AOTC) is:

  • Worth a maximum benefit up to $2,500 per eligible student.
  • Only available for the first four years at an eligible educational or vocational school.
  • For students pursuing a degree or other recognized education credential.
  • Partially refundable. Eligible taxpayers can get up to $1,000 of the credit as a refund, even if they do not owe any tax.

The Lifetime Learning Credit (LLC) is:

  • Worth up to $2,000 per tax return, per year, no matter how many students qualify.
  • Available for all years of postsecondary education and for courses to acquire or improve job skills.
  • Available for an unlimited number of tax years

Taxpayers should use Form 8863, Education Credits, to claim these education credits.

Additionally:

  • A student is required to have Form 1098-T, Tuition Statement, to be eligible for an education benefit. They receive this form from the school attended.
  • Taxpayers may use only qualified expenses paid to figure a tax credit. These include tuition and fees and other related expenses for an eligible student.
  • Eligible educational schools are those that offer education beyond high school. This includes most colleges and universities.
  • Taxpayers may only claim qualified expenses in the year paid.
  • Taxpayers can't claim either credit if someone else claims them as a dependent.
  • Income limits could reduce the amount of credits.
  • Taxpayers can't claim either the AOTC or LLC for the same student or for the same expense in the same year.
  • The Interactive Tax Assistant tool on IRS.gov can help determine eligibility for certain educational credits including the American Opportunity Credit and the Lifetime Learning Credit.

See IRS Publication 970, Tax Benefits for Education, for details, rules, examples and a complete explanation of benefits.

The 2017 Massachusetts Child Support Guidelines, provides that no parent shall be ordered to pay an amount in excess of fifty percent of the undergraduate in-state costs of the University Massachusetts - Amherst, unless the Court enters written findings that a parent has the ability to pay a higher amount.

This new rule does not require parents to contribute to their adult child's college expenses.

With the high cost of college expenses, families need to strategically plan how to pay for such costs. Under the new guidelines, the payor of child support may be entitled to a reduction in their child support obligation.

To learn of how the new guidelines impacts your situation, contact the Law Offices of Renee Lazar at 978-844-4095 to schedule a FREE one hour no obligation consultation.

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Law Offices of Renee Lazar
4308 Thompson Farm
Bedford, MA 01730
Phone: 978-844-4095
Fax: 781-687-5807
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