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Despite Sweeping Changes from Tax Reform, Tax Credits Still Exist Around Higher Education

The Tax Cuts and Jobs Act (TCJA) has brought significant changes to the way people handle their personal finances, including significant changes to personal deductions, mortgage deductions, charitable deductions and numerous other areas.

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The Tax Cuts and Jobs Act (TCJA) has brought significant changes to the way people handle their personal finances, including significant changes to personal deductions, mortgage deductions, charitable deductions and numerous other areas.

The Tax Cuts and Jobs Act (TCJA) has brought significant changes to the way people handle their personal finances, including significant changes to personal deductions, mortgage deductions, charitable deductions and numerous other areas. One area that has concerned people is the availability of tax credits for higher education expenses, especially as college and university tuition and fees continue to increase. 

Despite some new restrictions placed on college payments by the TCJA, the good news is there are a number of tax credits that can bring sizable benefits to those either paying for college tuition or preparing to start doing so. 

American Opportunity Tax Credit 

This is a tax credit of up to $2,500 for eligible students (students must be enrolled at least part-time and working towards a degree of some kind to qualify) who are receiving some form of student financial aid. Students and families are eligible if the modified adjusted gross income is $90,000 or less (or $180,000 if married filing jointly). 

Lifetime Learning Credit 

This is a tax credit for up to $2,000 each year a person is enrolled in higher education, including undergraduate, graduate or professional degree classes. This credit, however, has a lower income threshold than the American Opportunity Tax Credit—it is available to people with a modified adjusted gross income between $57,000 and $67,000 (or $114,000 and $134,000 for those filing jointly).  

College Work Programs 

Finally, there could be exclusions that apply to students at colleges and universities that allow students to engage in paid work-study or work-learning programs. Students need to check with their specific institutions to determine applicability and eligibility. 

The cost of higher education does not appear to be decreasing any time soon, so it could prove valuable for students and their families to investigate these tax credits and others for potential savings come tax time. 

 

Disclaimer: Any written tax content, comments, or advice contained in this article is limited to the matters specifically set forth herein. Such content, comments, or advice may be based on tax statutes, regulations, and administrative and judicial interpretations thereof and we have no obligation to update any content, comments or advice for retroactive or prospective changes to such authorities. This communication is not intended to address the potential application of penalties and interest, for which the taxpayer is responsible, that may be imposed for non-compliance with tax law. 

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