Are You Going Back To School?
“Why do you need someone else to save you? Think about saving yourself.” - HIGHER LEARNING
written and directed by John Singleton
(3.5-minute read)
If you’ve been contemplating a new skill, or just taking a few classes to brush up on your current expertise, you might be eligible for a tax credit to recoup some of the costs. As creators, you know that experiences matter. Getting out there in the world and experiencing life is the foundation of creating something new.
Some of you have thought about gaining a brand-new skill to become a more interesting person or strictly for your creative process. Some may want to take another class or two at UCLA that they’ve always found interesting. I’ve talked with more writers recently who are in the process of taking higher education classes. Some have said it’s because things are slow and now is the perfect time. Whatever the reasons, here are a few tax credits to look into if you’re considering this.
LIFETIME LEARNING CREDIT
The IRS says you can qualify for the Lifetime Learning Credit if you’re taking a course to get a degree, educational credentials, or “to acquire or improve job skills.” Pretty cool, right? You don’t necessarily have to go back to school for a degree.
The credit is for tuition and related expenses. Room and board costs do not qualify. Course materials such as books, supplies, and equipment do qualify. Maybe you need the latest version of Final Draft or Highland 2 (shoutout to John August) for your course. This might qualify for a tax credit.
You can receive up-to $2,000 in tax credits per year on your tax return. There is no limit to how many years you’re able to claim this credit. If you’re still learnin’, then keep on earnin’ (that credit). There are many other rules that have to be met, such as income limits, and you can find all the info by CLICKING HERE.
AMERICAN OPPORTUNITY TAX CREDIT
The American Opportunity Tax Credit is for those who are pursuing an undergrad degree. Technically it’s for the first four years of higher education. Does this mean if you only completed two years of college after high school then you might qualify? I’m not a tax expert, but that’s how I’m reading it. You must also be enrolled at least half-time as a student. This will differ by the institution, but it’s more than just one course.
Similar to the Lifetime Learning Credit, eligible expenses do not include room and board, but they do include tuition and related expenses. If you’re claiming the American Opportunity Tax Credit then you cannot claim the Lifetime Learning Credit and vice versa. No double-dipping folks!
The maximum amount of credit you can receive is $2,500 per year for four years. Unlike the Lifetime Learning Credit, you can receive a refund due to this tax credit. Once again, there are rules that must be met and you can find the full list by CLICKING HERE.
EDUCATION SAVINGS BOND
This one isn’t a tax credit but it does have some tax benefits. I-Bonds were popular a couple of years ago, and I know many a person who purchased them. Series EE Bonds are less popular but still hanging around. These two bonds are in-play here as far as paying for education goes.
If you have qualifying educational expenses, then the interest earned from these bonds will be tax-free. It may not sound like much, but it’s a simple way to reduce your taxable income when filing your tax return. Educational expenses are more lenient under this program. Tuition, fees, and even expenses related to sports, games, or hobbies may be considered qualifying expenses. But, oddly, books are not included.
Yes there are rules and limitations and you can read them by CLICKING HERE.
FOLLOW THE RULES
There are many ways you can qualify, and disqualify, for these tax advantages related to higher education. I am not a tax expert. I highly recommend seeking one out before trying to claim these credits and exclusions.
If you’re thinking about taking a directing class, or something unrelated to the Entertainment Industry, at USC or anywhere else, you might have some help from the IRS. By the way, did you really think I was going to mention UCLA and not mention USC?! Now get to learnin’!
If you’d like more information about personal finance, you can schedule a complimentary meeting HERE.
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