Tax Reform – Impact on Education Credits & Deductions
The recent tax reform made some changes to the tax benefits available for people saving money for college along with those paying down student loans. But, most of the education tax benefits (such as deducting interest on student loans) remain the same.
This article will help explain what has changed starting in 2018.
Current College Students
The American Opportunity Credit – No Change.
The American Opportunity Credit, or AOC, was not affected by the tax reform bill. This credit is as much as $2,500 per student, with up to one thousand dollars of that being refundable. This credit is available for up to four tax years for each student. Students must not have completed their first four years of education (postsecondary) prior to the completion of the relevant tax year. They are required to be enrolled a minimum of half time during an academic period, as well as be studying for a credential or a degree.
This credit is usually claimed by parents. Students and parents will need to communicate about eligible expenses and ensure the paperwork is made available – transcripts, receipts, and Form 1098-T. This credit does not normally benefit graduate students and part-time students.
Whole Story at TFX.