Tax Benefit Brochure

TAX ADVANTAGES AND OTHER IMPORTANT FINANCIAL AID INFORMATION

FOR FAMILIES OF BEACON COLLEGE STUDENTS

1. How to Deduct Tuition & Fees as Medical Expenses Beacon College’s tuition, fees, books and other associated expenses may qualify as medical tax deductions. Other deductible expenses could include room and board, supplies, computer and travel costs. According to Internal Revenue Service (IRS) publications

More Proof Here is more documentation confirming the validity of taking your student’s education as a medically related deduction. The following quote comes from a private letter ruling (200521003) issued by the IRS on May 27, 2005. It addresses the very nature of the type of education offered at Beacon College. “Helping the student overcome a physical or mental handicap and move on to normal education and living is the essence of special education. Normal education is not medical care because it is not designed to help someone overcome a medical disability. Thus, a physician or other qualified professional must diagnose a medical condition requiring special education to correct the condition for that education to be medical care. The school need not employ physicians to provide that special education, but must have professional staff competent to design and supervise a curriculum providing medical care. Overcoming the learning disabilities must be a principal reason for attending the school, and any ordinary education received must be incidental to the special education provided.”

502 (Medical and Dental Expenses) and 907 (Tax Information for Persons with Disabilities):

“You can include in medical expenses the cost (tuition, meals and lodging) of attending a school that furnishes special education to help a child to overcome learning disabilities. A doctor must recommend that the child attend the school. Overcoming the learning disabilities must be a principal reason for attending the school, and any ordinary education must be incidental to the special education provided.” The IRS permits taxpayers to deduct any medical or dental expenses that exceed 7.5% of their Adjusted Gross Income (AGI). To assist you with your tax return preparation, and to maximize your tax deductions and credits related to your student’s studies, Beacon College provides a letter to the families of its students in January detailing the amounts paid to the College for the previous calendar year.

TAX ADVANTAGES AND OTHER IMPORTANT FINANCIAL AID INFORMATION

FOR FAMILIES OF BEACON COLLEGE STUDENTS

2. Using the American Opportunity Tax Credit to Save Tax Dollars

$2,500 per student. Thus, the first $4,000 spent on tuition would generate a tax credit of $2,500, lowering your tax by that amount. This is a refundable credit, meaning if the credit exceeds your taxes owed, you will get money back from the IRS — up to 40% of the refund (up to $1,000). You must file a federal tax return to claim this credit. It is available to taxpayers with a modified gross adjusted income (MAGI) of up to $90,000 ($180,000 if filing jointly). To receive full credit, your MAGI should be $80,000 or less ($160,000 or less for married filing jointly). Students must be enrolled at least half time in one semester and can claim the credit on their own return if not a dependent — even if they have no income.

3. The Lifetime Learning Tax Credit The Lifetime Learning Tax Credit can be applied to tuition or related expenses for eligible students pursuing an undergraduate, graduate or professional degree at an eligible institution. A family can claim a tax credit of up to $2,000 per tax year for an eligible dependent (or the taxpayer or taxpayer’s spouse) for an unlimited number of years. A tax credit is a dollar-for-dollar reduction in tax — it’s the best kind of tax advantage. If your student is a dependent on your tax return, you get the tax credit regardless of where the funding came from — e.g., 529 plans, gifts from grandparents, the child’s part-time work, etc. It is vital to calculate where the credit can be used best: should the parents take it, or would it be better for the child to claim and take the credit? This is especially true for high-income parents who would lose the tax credit once their income hit a certain level. You can claim a tax credit of 100% of the first $2,000 of qualified educational expenses (including cost of materials such as books, supplies and equipment) and 25% of the second $2,000 of qualified educational expenses, up to

The credit is 20% of the first $10,000 of qualified educational expenses paid for all eligible students. This tax credit is available to taxpayers with a MAGI of less than $80,000 ($160,000 if filing jointly). Note: The American Opportunity Tax Credit and the Lifetime Learning Tax credit cannot be taken simultaneously for the same student.

How the Medical Expense Deduction and Tax Credits Options Impact Beacon Families Let’s take a look at how these tax deductions and tax credits can benefit your family. Although these examples are based on actual tax returns, your situation may be very different. For example, there may be additional implications for state income taxes, depending upon the laws of your state. You should always seek the advice of a professional tax advisor for the most accurate and up-to-date information. These examples assume no state income tax.

Note: The following examples do not incorporate loan or scholarship information for siblings enrolled in a college or university other than Beacon College.

THE PEREZ FAMILY Reyes is a single parent whose son Dani is a Beacon student. Dani’s educational expenses are $64,072 and he receives $10,000 in scholarship assistance.

THE DEVLIN FAMILY Dan and Peggy Devlin are the parents of Kelly. They operate a small family business. Kelly’s education expenses are $64,072 and her scholarship assistance is $8,000.

Without Medical

With Medical

Without Medical

With Medical

Deduction

Deduction (Estimated)

Deduction

Deduction (Estimated)

Adjusted Gross Income

$ 81,039 $ 19,400 $ 61,639 $ 7,675 $ 2,740* $ 4,935 $ 10,535 $ 5,600+

$ 81,039 $ 45,011 $ 36,028 $ 4,030 $ 2,740* $ 1,290 $ 10,535 $ 9,245+

Adjusted Gross Income Itemized Deduction

$ 112,761 $ 25,900 $ 86,861 $ 10,347 $ 3,000* $ 7,347 $ 13,535 $ 6,188+

$ 122,761 $ 44,926 $ 67,835 $ 7,728 $ 3,000* $ 4,728 $ 13,535 $ 8,807+

Standard or Itemized Deduction

Taxable Income

Taxable Income

Tax

Tax

Credits

Credits

Total Tax

Total Tax

Fed Tax Withheld

Fed Tax Withheld

Tax Owed ($) or Refunded (+)

Tax Owed ($) or Refunded (+)

(Net difference +$3,645)

(Net difference +$2,619)

THE JONES FAMILY James and Roberta Jones have two children in college. Denise attends a state university with educational expenses of $10,000 and Theo is a Beacon student. Theo’s educational expenses are $64,072 and his scholarship assistance is $5,000.

THE LIN FAMILY Paul and Laurel Lin are the parents of Gregory and Sarah, both enrolled in college. As a Beacon student, Gregory’s educational expenses total $64,072. He receives $3,000 in scholarship assistance. Sarah attends a private college close to home.

Without Medical

With Medical

Without Medical

With Medical

Deduction

Deduction (Estimated)

Deduction

Deduction (Estimated)

Adjusted Gross Income Itemized Deduction

$ 144,798 $ 25,900 $ 118,898 $ 17,392 $ 6,000* $ 11,392 $ 13,943 $ 2,551+

$ 144,798 $ 45,789 $ 99,009 $ 13,020 $ 6,000* $ 7,020 $ 13,943 $ 6,923+

Adjusted Gross Income Itemized Deduction

$ 270,877 $ 25,900 $ 244,977 $ 46,465 $ 45,465 $ 43,388 $ 2,077+

$ 270,877 $ 42,750 $ 228,127 $ 42,421 $ 41,421 $ 43,388 $ 1,967+

Taxable Income

Taxable Income

Tax

Tax

Credits

Credits

$ 1,000 (Income too high) $ 1,000 (Income too high)

Total Tax

Total Tax

Fed Tax Withheld

Fed Tax Withheld

Tax Owed ($) or Refunded (+)

Tax Owed ($) or Refunded

(Net difference +$4,372)

(Net difference +$4,044)

* Indicates the American Opportunity Tax Credit is included.

NOTE

In every single instance, taxes would be saved, even for high-income families. These savings can be applied to your student’s tuition and expenses at Beacon to lower the overall costs.

TAX ADVANTAGES AND OTHER IMPORTANT FINANCIAL AID INFORMATION

4. Student Loan Interest Deduction You may take a tax deduction of up to $2,500 on the interest you pay each year on a student loan for yourself, your spouse (if married) or a person who was your dependent when the loan was taken out. NOTE: The student must have been enrolled at least half-time when the loan was taken out. You may claim this deduction even if you do not itemize. As of 2023, single tax filers with a modified adjusted gross income (MAGI) of $90,000 or more could not claim the deduction. Single tax filers with an MAGI between $75,000 and $90,000 could take the deduction, but it would be reduced based on their income. For answers to frequently asked questions about these two programs, consult IRS Publication 970 - Tax Benefits for Higher Education, Tax Topic 456 – Student Loan Interest Deduction, and Tax Topic 513 - Educational Expenses.

For More Information For more information on these and other financial aid programs and services at Beacon College, please contact: Stephanie (Knight) Liebowitz, MEd Director of Enrollment Services & Financial Aid Beacon College • 105 East Main Street, Leesburg, Florida 34748 Phone: 352-638--9731 Email: sliebowitz@beaconcollege.edu

105 East Main Street Leesburg, Florida 34748 BeaconCollege.edu

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