Tax Benefit Brochure

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.