(Columbus, OH). This tax season, don’t write a higher check for your taxes than necessary. Ohio CPA Ted Johnson of The Ohio Society of CPAs, outlined a few of 2009’s best credits and deductions in a series of online videos available at financialfitnessohio.com.
These tips could reduce your taxable income and leave more money in your savings account on April 15.
Educational Credits
Parents of students or those who file their own returns may be able to take advantage of these tax-favored educational opportunities:
The American Opportunity Credit (2009 and 2010). This credit replaces and expands on the Hope Scholarship Credit and can be claimed for the first four years of college or other postsecondary school that leads to a recognized educational credential. It does not apply to graduate-level courses.
The maximum credit has increased to $2,500 per student for each year; 40% of the credit is refundable, which means you can receive up to $1,000 even if you owe no taxes.
Qualified tuition and expenses now include books, supplies and equipment required for a course of study even if the materials are not purchased from the educational institution as a condition of enrollment or attendance.
The Lifetime Learning Credit may be claimed for qualifying tuitions and expenses for students enrolled in eligible educational institutions. The credit is equal to 20 percent of the taxpayer's out-of-pocket expenses for all eligible students in a family up to a maximum of $10,000 in expenses ($2,000).
Coverdell Education Savings Accounts are a great way to save for college. You can invest up to $2,000 a year and withdraw the money tax-free so long as it’s used for eligible educational expenses.
529 college savings plans are another smart savings vehicle. Similar to Coverdell ESAs, they have no annual contribution or income limits, though they may have plan maximums. In addition, if you invest in Ohio’s CollegeAdvantage 529 plan, withdrawals used for qualified higher education expenses are exempt from federal and Ohio income tax, so long as the recipient is not claiming any other education tax incentive. Contributions in this plan may be deducted from Ohio taxable income.
To learn more, download IRS Publication 970 Tax Benefits for Education (PDF) from the IRS.
If you’ve had a major change in your financial situation such as a divorce, death of a spouse or a job loss, consider having your taxes done by a CPA.
To find an Ohio CPA, visit financialfitnessohio.com or call toll-free at 888.959.1212.
The Ohio Society of CPAs, established in 1908, represents nearly 24,000 CPAs in business, education, government and public accounting. The Ohio Society’s members not only meet statutory and regulatory requirements as CPAs, but also embrace the highest standards of professional and ethical performance. This is achieved through ongoing professional education, comprehensive quality review and compliance with a strict Code of Professional Conduct.
# # #
These tips could reduce your taxable income and leave more money in your savings account on April 15.
Educational Credits
Parents of students or those who file their own returns may be able to take advantage of these tax-favored educational opportunities:
The American Opportunity Credit (2009 and 2010). This credit replaces and expands on the Hope Scholarship Credit and can be claimed for the first four years of college or other postsecondary school that leads to a recognized educational credential. It does not apply to graduate-level courses.
The maximum credit has increased to $2,500 per student for each year; 40% of the credit is refundable, which means you can receive up to $1,000 even if you owe no taxes.
Qualified tuition and expenses now include books, supplies and equipment required for a course of study even if the materials are not purchased from the educational institution as a condition of enrollment or attendance.
The Lifetime Learning Credit may be claimed for qualifying tuitions and expenses for students enrolled in eligible educational institutions. The credit is equal to 20 percent of the taxpayer's out-of-pocket expenses for all eligible students in a family up to a maximum of $10,000 in expenses ($2,000).
Coverdell Education Savings Accounts are a great way to save for college. You can invest up to $2,000 a year and withdraw the money tax-free so long as it’s used for eligible educational expenses.
529 college savings plans are another smart savings vehicle. Similar to Coverdell ESAs, they have no annual contribution or income limits, though they may have plan maximums. In addition, if you invest in Ohio’s CollegeAdvantage 529 plan, withdrawals used for qualified higher education expenses are exempt from federal and Ohio income tax, so long as the recipient is not claiming any other education tax incentive. Contributions in this plan may be deducted from Ohio taxable income.
To learn more, download IRS Publication 970 Tax Benefits for Education (PDF) from the IRS.
If you’ve had a major change in your financial situation such as a divorce, death of a spouse or a job loss, consider having your taxes done by a CPA.
To find an Ohio CPA, visit financialfitnessohio.com or call toll-free at 888.959.1212.
The Ohio Society of CPAs, established in 1908, represents nearly 24,000 CPAs in business, education, government and public accounting. The Ohio Society’s members not only meet statutory and regulatory requirements as CPAs, but also embrace the highest standards of professional and ethical performance. This is achieved through ongoing professional education, comprehensive quality review and compliance with a strict Code of Professional Conduct.
# # #