Julian Currie, Minnesota School of Business-Rochester accounting program chair and resident tax guru, provides some insight for adding some cushion to your bottom line. Read, save and be happier with more money in your pocket!
The tax deadline is just a few days away, so if you have not filed your 2012 tax return there is still time left. You will need to complete your 2012 tax return in order to fill out your 2013-2014 Free Application for Federal Student Aid (FAFSA) with the financial aid department. Most MSB-Rochester students have completed their 2012 tax return and even received their refund, but in speaking with students they were unaware of the various college tax credits that are available.
The American Opportunity Credit was extended in late December 2012 for individuals working toward a higher education degree as long as you have not earned a bachelor degree previously. The American Opportunity Credit works in two parts.
First, it reduces your taxable income by up to $1,500, resulting in less tax money owed. Second, a refundable credit is available up to $1,000. This amount may increase your refund or decrease amount due. If you are not eligible for the American Opportunity Credit, the Lifetime Learning Credit is available. Unlike the American Opportunity Credit, the Lifetime Learning Credit does not restrict what type of education one is pursuing. The Lifetime Learning Credit has a maximum credit of $2,000 and will only reduce your taxable income, which may result in an increased refund or a decreased amount owed.
How much of the credit is available is determined by the amount of tuition cost and other college related expenses minus any scholarship money awarded. Other college-related expenses include textbook cost, supplies and equipment needed for courses. The American Opportunity Credit is available for only four years, whereas there is no limit on the Lifetime Learning Credit.
If you feel you did not take advantage of one of these education credits, it is not too late to correct your 2012 Tax Return. Individuals are still able to file an Amended Tax Return, but seek the advice of a tax preparer first.
It is a great day for accounting! Contact MSB-Rochester at 507-536-9500 to learn how to become an accounting guru.