By Stephanie Carson
Special to The SUN
It’s back-to-school time, and thousands of Coloradans are spending millions of dollars on advanced education.
In addition to the student loans and grants available, Uncle Sam also has programs to offer relief in the form of tax credits, explains Michael Dobzinski, an IRS spokesman.
“There’s a couple tax credits that you can get,” he points out. “What’s great about a credit is a credit is a dollar-for-dollar reduction in your taxes.”
The tax credits available include the American Opportunity Tax Credit, which offers $2,500 annually for an eligible student, and the Lifetime Learning Credit of up to $2,000 for qualifying students.
According to the U.S. Department of Education, 47 percent of all undergraduates received education tax benefits in one recent school year. While tax-filing season is months away, Dobzinski says now is the time for students to keep careful records of school expenses so they can take full advantage of the credits at tax time.
“Keep track of everything that you spend and then at the end of the year, you’ll know whether, in fact, some of these expenses qualify or you can figure that out, and you can get a credit on your tax return,” he explains. In some situations, Dobzinski says a person can deduct tuition, as well as the costs of work-related education expenses.
Those include advanced training required by an employer or that is necessary to advance in a field.
The Coverdell Education Savings Account and 529 Plans also allow taxpayers to allocate money pre-tax for education expenses.
