• Tax Tips

    Jackson Hewitt wants you to get all the deductions and credits you’re entitled to! For that reason, we invite you to view our list of 2016 tax tips and tactics designed to help you reduce your tax burden.

  • Education

    Coverdell Education Savings Account (Education IRAs)

    An education savings account, Coverdell ESA, can be established for a child under he age of 18. Any individual (including the child) can contribute to the account during the year if they meet certain income limitations. The total annual contributions per beneficiary are limited to $2,000. Withdrawals will be tax-free when used to pay education costs (elementary school, secondary school, or a post-secondary school such as a college) for the beneficiary.

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    Education Expenses – Tuition Payment Verification

    Students attending eligible higher education institutions need more than Form 1098-T, Tuition Payments Statement, if challenged to prove paid educational expenses. Receipts from the educational institution showing the amount actually paid for tuition and fees are adequate for verification. Canceled checks or bank statements are also good records. If payments included amounts for charges other than tuition and fees, you should save a copy of billing documents from the school that break down the charges individually.

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    Educator Expenses - Deduction

    If you are an elementary or secondary school teacher, instructor, counselor, principal, or aide and you have worked at least 900 hours during a school year, you may deduct the cost of books, supplies, computer equipment (including software and services), and other materials used in the classroom. You may deduct up to $250 of these expenses directly against your income, without itemizing deductions. Remaining expenses can be deducted as a miscellaneous itemized deduction on Schedule A, subject to the 2% of adjusted gross income limit. Each qualified taxpayer may deduct up to $250 in expenses on a joint return.

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    Employer-Provided Educational Expenses

    You may be able to exclude up to $5,250 on your return for employer-provided educational assistance. The eligible education includes undergraduate and graduate courses.

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    Lifetime Learning Credit

    This is a nonrefundable tax credit for payments of qualified tuition and related expenses for post-secondary education. The allowed credit is 10% of the qualified tuition, fees, and expenses you, your spouse, or a dependent paid for courses. You do not have to be in a degree program, a full-time student, or in the first four years of post-secondary education to qualify for the Lifetime Learning credit. The maximum credit allowed per return is $2,000.

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    Qualified Tuition Program

    A Qualified Tuition Program (QTP) allows you to prepay a student's college tuition or contribute to a higher education savings account. Contributions are not tax deductible, but distributions will be tax-free if the distributions are used to pay for qualified higher education expenses.

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    Student Loan Interest

    You may be able to claim a deduction of up to $2,500 for interest paid on a qualified student loan. Only the amount of interest actually paid during the year may be deducted. You cannot claim the deduction in any tax year in which another taxpayer claims you as a dependent. You do not need to itemize to claim this interest. This amount is subject to a phaseout, which begins at $60,000 of income for a single person and at $125,000 for a married couple filing a joint return.

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    Tuition and Fee Deductions

    Instead of claiming the American Opportunity Credit or Lifetime Learning Credit, you can claim a tax deduction for qualified higher education expenses. You can take a deduction of up to $4,000 for qualified tuition and related expenses as an adjustment to income, even if you do not itemize your deductions. Certain restrictions apply.

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