With schools starting back, H&R Block has some tips regarding education related tax benefits. If you are an educator, student, or have a student dependent, take note of the following points to get the most tax benefit from your education expenses:
-Elementary, middle, and high school teachers and certain other educators are eligible for up to $250 deducted from their taxable income for the money spent on unreimbursed classroom supplies. So keep your receipts!!
-Many expenses to attend colleges, universities, vocational, and technical schools qualify for tax credits. In order to claim a credit for amounts spent for books and supplies required for class, it is important to keep purchase receipts. Additionally, the institution will provide Form 1098-T either through the mail or posted online in the student’s account at the beginning of 2022. Form 1098-T reports the tuition and fees eligible for the education tax credits. Education tax credits can be worth up to $2,500 in tax
-Usually, your child can be claimed as a dependent through age 23 if they are a full-time student during 5 months of the tax year. Most of the time it is more beneficial for the parents to continue to claim the student as a dependent than for the child to claim themselves on their own tax return.
-IRA distributions used for qualifying higher education expenses are exempt for the 10% penalty for early distributions. So, if you need money for your or your child’s education after high school, look to your IRA for possible funding.
-If you’re interested in how to save for your child’s future education, talk to your investment advisor about Qualified Tuition Plans (also known as 529 plans). These tax advantaged plans grow tax free if used for education. Qualified Tuition Plans can be used for primary and secondary schools as well.
-If you are self-employed and attend conferences, seminars, college or vocational classes, or other types of education related to your business, you may be able to deduct the cost of the classes and materials from your self-employment income resulting in a savings in income tax and self-employment tax.
-Student loan interest paid is deductible from your taxable income (subject to higher income
phaseouts). The loan company will provide Form 1098-E at the beginning of 2022 reporting the amount of student loan interest paid in the year.
If you are interested in going back to school to begin a part-time career as an H&R Block Tax Professional, the H&R Block Income Tax Class begins soon. Registration is open now. Classes are taught virtually. Students who complete the class are eligible to interview for a position with H&R Block. If you are detail oriented, love working with numbers, and love working with people, you are exactly who we are looking for! Call your local office for more information!
If you have questions about education related tax benefits and would like help from the Tax Professionals at H&R Block, please call your local H&R Block office. In Manchester TN call 931-728-9462. H&R Block Has Your Back!
*Column by Rosalyn Partin at Manchester H&R Block