Get Your Distance Degree With Help From The IRS!

As many students are quickly finding out, President Obama’s Health Care and Education Reconciliation Act introduced a revision to the Hope tax credit called the American Opportunity Tax Credit. The key problem with this new program though, is that it is limited to the first two years of a student’s academic life. That leaves an incredible number of other students ineligible. Those attending on campus and those getting their college degrees online haven’t been left out, however.

One of these programs is called the Lifetime Learning Credit. It was introduced in 2001 along with the Hope credit. The Lifetime doesn’t offer as much cash as the Opportunity credit. At the same time it covers a broader population. So in the end it balances out in its own way.

The Lifetime Learning Credit is for students who are in their third year of college, taking post-graduate courses or even going part time with as little as one class. Another key difference is a household can have multiple Learning Credits due to having more than one child in college.

Since Obama, the amount credited has been increased. At the moment it gives a household as much as a 20% off for the first $10,000 spent, i.e., up to $2,000. Unlike other credits, it can be applied to a broader number of expenses though, such as not only tuition, text books and fees, but other education-related items such as a laptop. It can even be applied to travel, if you can prove to the IRS that the travel is education-related.

Like the Opportunity credit, there is what’s called a “phase out” point. By that what is meant is if a single person earns over $60,000 or a couple filing a joint return earns over $120,000 adjusted income, they earn too much and would get nothing. Another important point is the IRS will only give out one check. If a child and the parents both file for the credit, the IRS will only give out one check (usually to the parents).

Some other things the IRS will reject is a single person can’t get both Opportunity and Lifetime credit at the same time; just one. That doesn’t mean a parent who has more than one child going to college can’t get both though. If the parent is financing one child who’s a freshman and another who’s a junior, he or she can get both.

What must absolutely be understood is the Lifetime is a credit, not a tax deduction. You apply the Lifetime after totaling your taxes, not subtract it from the expenses. The IRS doesn’t allow this kind of double dipping, and could reject the entire thing. There are a number of other peccadilloes the IRS has and some of them can be pretty detailed (such as advancing your education only to get a better job at another company). So one should have the entire tax form reviewed by an accountant before applying for it.

Still, one could end up with a check from no less than the IRS if you do all this right. That’s one quick way to get your distance degree in a manner that best benefits you financially. Checking into the college loans available prior to attending, as well as this credit, means doing more than just your school homework. There is much more information about on line degrees on the internet.