I forgot to mention that, although tuition is going to be a big expense this year, I will be eligible for the Lifetime Learning Credit. In essence, it is a 20% rebate back on your college-level expenses up to $10,000, with some restrictions. Since it is a tax credit and not an deduction, it’s up to $2,000 cash in your pocket.
You must pay these expenses yourself, not from a scholarship or a 529 plan. Tuition counts, and mandatory fees count, but for me books do not, since they are technically not “required for enrollment”. Very disapointing, sometimes the books cost as much as the class!
Also, it is important to note the credit starts to be phased out once your modified adjusted gross income (MAGI) is between $42,000 and $52,000 ($85,000 and $105,000 if you file a joint return), and is gone completely past that. It looks like we’ll slip under that this year, so I guess that’s good (although earning more would be nice too). Unlike the Hope Scholarship Credit, there is no limit to the number of years in which a Lifetime Learning Credit may be claimed. You could do it every year. The best place for more info is the IRS – Tax Benefits for Education.
They really need to cover books if they’re going to cover tuition. I’m surprised colleges don’t just ‘require’ the textbooks and help the students out.
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There are some options for being frugal with text books. Obviously you can buy them used, and scour the internet/half.com for the text before you go shelling out full price at the university book store. But you can be more creative than that.
When I was in college I would make an effort to find out from my teachers well in advance what texts were required for their class, then I would start hunting them down. You can try public libraries, the best resource I found was Inter-Library Loan from my College library. Basically I had access to about 7 nearby college library catalogs, usually I could find the text there, and then request them from my library. It would take a week or two for the book to come in, and then I was only allowed to have it for 3 weeks with 2 renewals, which brought me to 9 weeks. My classes were about 10 – 11 weeks long, so I would just go overdue for 2 weeks and pay the $1 in fines after the finals were over when I returned the book.
Obviously some texts you would want to keep for reference materials, but you can always buy the book later after seeing if it is worth the investment from the library.
I used the lifetime learning credit as well. Since I went to an out of state college, it didnt take long to max out the credit. The bottom line is that people need to take advantage of every tax credit possible.
Good ideas Kevin, I might do that for some classes although it does require a lot of planning ahead and hoping someone else doesn’t put a hold on the books.
I also like to highlight/mark up my books for some classes, so that wouldn’t work too well. Definitely will look into it next semester.
Currently there is a bill in front of the House Ways and Means committee that, if passed, would allow for a full deduction of tution. This would be my dream bill…since I’m paying 35k a year. If interested, check it out at http://thomas.loc.gov
It is H.R.941
That would be nice, although I don’t see that happening any time soon. If it could be used in conjuction with 529 plans, that would be very interesting.
tax credit means that you receive the$2000 on top of whatever you were already getting back? Or that if you owe 2200 in taxes, you only pay the IRS $200?
thanks
Credit means on top of whatever you were already getting back.