How Does a College Tuition Tax Credit Work? – Venezuela Today
The tax system. This video offers a comprehensive outline of the tuition credit system and the way it is used.
Tax credits permit you to reduce tax dollar-for-dollar you owe. Credits for tuition at college are calculated based upon expenses paid. If you are to use them, you must maintain receipts for all the things you buy. This video will explain two of the major tax credits programs.
The American Opportunity Tax Credit is one of the most frequently used schemes. You can use it for only four years, and can be subject to income cap. For eligibility, the family’s adjusted net income has to be below $180,000. The maximum credit that you are eligible for under this program is $2500 with the possibility of receiving as much as $1000 cash.
Additionally, there is another tax credit, the Lifetime Learning Tax Credit. The maximum amount of adjusted gross income allowed for tax purposes is $69,000. The maximum amount allowed is $2000. This amount must equal 20% of all expenses. This is also unlimited in terms of how many years you may claim it. Now you know the fundamentals of how the college tuition credits function.