It’s tax time, which means it’s time to claim education tax credits you may be eligible for. Unfortunately, a lot of tax software programs don’t provide good instructions for doing so, so it’s a good idea to pull up the instructions for Form 8863 and review them before filing. The American Opportunity Tax Credit is the more valuable of the…
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Tax Credits and Deductions
A client’s former advisor told her that she should save $800,000 per child for college. None of my initial reactions to that were appropriate for a client meeting, but how much should you save for college is an important question for a lot of families so let’s dig into that. First, why do advisors tell people that they need to…
Form 1098-T is a tuition statement that students receive from their college. It serves two primary purposes: Documenting eligibility to claim the American Opportunity Tax Credit or Lifetime Learning Credit Documenting that the student was enrolled in a college and that 529 withdrawals up to net cost of attendance are therefore qualified Form 1098-T isn’t filed with your taxes; instead,…
Filing the FAFSA raises tons of questions for divorced parents. Here are some answers. Do both parents need to fill it out? The FAFSA only requires the “custodial” parent to provide income and asset data. The CSS Profile requires both parents to fill it out. Which parent is the custodial parent? Currently, the FAFSA says the custodial parent is the…
Generally the FAFSA does not count untaxed social benefits as income. Untaxed Social Security, SSI, foster care benefits and welfare payments are excluded from income for the FAFSA, although disability payments and worker’s comp– which are insurance benefits– are added back. Normally unemployment income is taxable so this exclusion would not apply. However, the American Rescue Plan made 2020 unemployment…