Are You Receiving All The Education Tax Credits And Deductions

Education tax deductions and credits from Cash Tracks Financial

When tax time comes around, are you being reactive or proactive?


Do you find yourself swimming in a sea of questions? Like, is it better to do my tax return cheaply? How do I know if I’m doing them the right way? Welcome to The Tax Answers Advisor with Marcelino Dodge. Today we’ll answer these questions and many more, sharpen your pencils and take some notes. Now here is your host, Marcelino Dodge.

Marcelino: Welcome once again to The Tax Answers Advisor. This is Marcelino Dodge, here on show number 23. And it’s amazing how almost a half a year of doing this and sharing this vital information with you all because it is so important to good, accurate tax information. Because one thing I have observed just if you try to watch the media is the media do usually does not understand taxes and usually says the wrong information.

So today, I want to extend a good thank you out to those listening throughout the US and throughout the world areas such as China, Korea, Ireland, all of those wonderful, we appreciate you tuning into this podcast. Listening into these program, we’re going to invite you to give a contact to me at any time to You can also get me at, or even call me that’s 844-394-4287.

And of course, I’m available on Facebook as well, on my Facebook page. It’s been there for quite a long time. So we’re really looking forward to speaking to you all today, a lot of action in the tax community with the American rescue plan being passed by the House, not quite signed into law yet. But there are several tax provisions within that we’re going to share some of those updates today. But in particular a little bit later. We’re also going to focus on credits for education for going to college.

And how you can benefit from those, as well as some good planning ideas that you need to keep in mind as you look at those. So we’re gonna talk about a number of things today. So we’re going to first give a quick update, a brief overview of the American rescue plan of some of the provisions is coming up that’ll be looks like signed into law probably, in just a day or so. From there when this is being recorded in this sequel is interesting provision, which is a nightmare for those who prepare taxes.

Especially, since it’s been going on for about a month now is one is that the first 10,200 of unemployment benefits for 2020 are going to be made non-taxable for households making under $150,000. And this presents a challenge for those who do taxes because ones like myself who may have prepared some tax returns already with unemployment benefits from 2020. It means that we have to go back, we have to look at those tax returns. And we may have to amend those tax returns with this provision.

So anyway, they don’t always understand how taxes work when they make some of these provisions and how difficult they actually make it on people. Now another thing to consider is they’ve extended and it looks like they’re going to extend the federal unemployment to $300 per week through September 6th, for those who are on federal unemployment, give them the extra 300. So, we’ll see how that works out.

Now, something that hasn’t been talked about much, and that is that if you’re if you have tax, if you have insurance through an exchange, and you’re getting the financial health, it’s that’s known as the advanced premium tax credit. Well, during 2020, if you got the financial help, and you just happened to pay more, then you happen to get more of a credit than you actually should have based on your income. And when you file your tax return.

Well, once again, another pain for some is that if some had to pay back now they may end up getting a refund back if they made a repayment of that credit. They pay it back so it’s going to be interesting to see how that works out. But once again, something that’s looking back to 2020 even though we’re halfway through the tax season processing 2020 returns. Of course, the part that gets a lot of people excited is the $1,400 per person payment which basically is what it is because if you’re single, you get $1,400.

If you’re married filing joint, you get $1,400 or you get $2,800 for the couple. Plus, the way that they worded it is that you also get $1,400 for qualifying dependents, which includes adults as well adult dependents. And then, they phase this out earlier than prior stimuluses. Like, if you’re single, it phases out at 80,000 completely, you don’t get it. Also it phased, which means 160,000 is worth phases out completely for married couples. Now, we got to keep in mind on this, which is as we work on tax returns through 2021.

Many people ask, well, are we going to be taxed on this? Why are you asking about how much we got? Wow. It’s because we have to reconcile that on the 2020 tax return that the two previous payments always had to be reconciled. Because some people actually, may not have gotten what they actually qualify for, because it was, those were 2020 credits. So we got some people that are actually going to get more of this stimulus, or actually the stimulus they should get, or the maximum amount they should get.

Because of income adjustments during the year 2020, well, it’s going to be a similar occurrence for 2021. With these $1,400 payments go out, you’re gonna have to keep track of them. And you should know exactly how much you got, you’ll probably get some form, we’re trying to wait to see what that’s going to be. But these, again, will be reconciled on a tax return, in this case, these payments, going out $4,400 are going to be reconciled on the 2021 tax return, it’s, it’s an advanced tax credit, it’s not going to be taxable to you.

But once again, your tax person, when you come into my office, or send me the information over the web portal, I’m going to ask you. Did you receive a stimulus payment of some sort in 2021? Which you’re gonna have to keep record of this, or what you could do, you could be proactive, and say, when you get it, let your tax person know. and they can put it in the records, which is, that’s actually a wonderful idea to do that.

I’m gonna have to encourage my clients to do that, to keep a record of that, and so we can put it on file for them so that we know that. Yeah, they got that they got that payment, and how much they got. So keep that in mind, non-taxable coming out. We’re not sure exactly when sometime this month is when they’re going to start sometime after the President signs into law. Also, another provision within the American rescue plan is the child tax credit is expanded up to $3,000 per child.

Now, instead of under 16, it’s per child under 18 for 2021 only. That’s going to be the key or that’s only for 2021 under the way the law is, looked like it’s going to be signed. Now an interesting provision they made up this is that this credit is going to be fully refundable for 2021, this year to 2021? Now, also, I don’t exactly know how they’re going to do this but it’s going to be issued out in advance payments. 50% are going to be issued out in advance payments. How they’re going to do that? How that’s going to work?

They’re going to do it off of the 2022 tax return. So you definitely need to get that filed as soon as possible if you have children age 17, and under to get this advance payment because it’s going to be based on 2020. For some reason you haven’t filed, they’re going to base it on your 2019. Which neither one of those credits that you’re going to have to track, okay, if you get advance payments, you’re going to have to know how much of an advance payment you received because again that’ll probably be reconciled when we go to do tax returns for 2021.

So again, another pain for those who prepare taxes because they just keep adding these little things like this that continually cause reconciling. For you as the taxpayer it’s a headache because they may or may not send something out to you, saying okay it isn’t in advance in the amount payment. Because if that is not accurate on the tax return, then you can get, you can send in a tax return that is essentially accurate with the information you have.

But because you have forgotten perhaps, how much of an advanced payment you got. They may actually, then come back and reduce your refund. Because I’d say, oh by the way, we are to give you this ampount. So we’re taking, we’re not going to give it to you again. I’ve seen that happened in prior years. This credit Is phasing out begins to phase out at $75,000 for single and then 150,000 for married couples. Now something that I haven’t seen talked about much with this advanced credit.

But one thing I’m going to make sure to mention is that because the IRS has now set up portals and has set up options where you can go in and set up your tax account online with the IRS. So you can actually check it out which is really nice that they were able to do that is that you can go into your account and you can opt out choose not to receive these advanced payments, which is actually something I might encourage ones to do.

That way you don’t have to mess with anything go in, opt out, you know, okay, yeah, I didn’t get any payments. And then when you go to file the tax return next year, they can just get the full amount makes it simple and easy. So, because by the time they start in July, the economy could be bouncing back and around. So people may not even really need that extra money and you need something more towards the beginning of 2022 when the tax returns are being filed, so it’s just an option that’s out there.

It’s might be something that I actually encourage people to do. Also, there’s some lot of details, the Earned Income Tax Credit which is well known to be a source of fraudulent tax filings, or fraudulent claiming of the Earned Income Tax Credit. This bill makes changes to it for a single individuals and for changes they’ve made in some amounts in regards eligibility, who can claim it. Some of those things but, one thing I know from just the individuals I’ve worked with over the years and clients I have actually managed to phase out of my business.

Because potentially, fraudulent claims of the Earned Income Tax Credit, it seems like this could even encourage more fraudulent activity. When it comes to the earned income tax credit, what the changes they made, I’m not going to go into details here because there’s just too much muddle and numbers and stuff. But yet, it’s something to know that they made some changes. And something that I could sit down with someone and explain and go over these changes in a more one on one setting or an over, over web conference setting, that way, we can make sure and get the understanding of what’s needed there.

Also, the Child and Dependent credit, which is a very nice daycare credit, that one’s get they’re enhancing, and they’re expanding that credit as well. So that individuals are paying for daycare can get a little bit better credit up to 4000 per child or 8000 per year. So that’s going to be very nice how that works out. So that could be a good one, we’ll see how that works. Also, the employer retention credit is being extended as well. And many employers are looking to take advantage of this when many have and many continue to do.

So we’re going to continue to look at this little closer and see how that fits into employers and so on and helping them because one of the areas you got to think about is that with some of the stuff that they’re talking about in regards to employers as credit is good, but if they talk about raising the minimum wage, that can cause some other issues with employers, but we’re going to talk about that at another time. Student loan forgiveness, those who had student loans and for whatever reason have gotten them forgiven. Wow, that is usually subject to taxation at least has been, but this exemption for having a student loan forgiven that has been extended now through 2026 with this legislation. So if you have a student loan, it’s been forgiven. You don’t need to pay tax on that, that’s a 1099 C and usually when debt is forgiven, you pay some sort of tax for those who have student loans, it gets forgiven not going to have to pay tax.

That’s, that makes that part a little easier there. So those are a few updates from the American rescue plan. There’s, there’s a lot more in there, I’m actually still reading and studying it myself to get some good and accurate information. Probably, talk about it again in another show just to get the information out and make sure give out accurate information because in the broadcast media, whatever form it takes radio, television, whatever.

I have seen so much misinformation about taxes in general, which is one of the reasons I sit down and do this program is because there is misinformation. That is out there, and you got to make sure you get the right thing. And I just feel it’s good to get people accurate facts that are with what the law is, not what one’s hope it to be. Now, I’m going to go and take a look at some credits that the federal government offers through the IRS for Educational purposes.

Because many like to go to college and perhaps, some have started doing certain types of college online and maybe there’s been an increase with perhaps doing some online schooling with the pandemic happening and many people have probably done this. And of course, you’ve got a lot classrooms going virtual and some still are and some colleges are planning to go back to full in-person learning in the fall to get fully going. But yet, how does that help us go back to college when we think about an education credit?

Well, when you get credits go into college, some of these can be refundable. And some of them are non-refundable these credits, the one that many especially younger students just coming out of high school going into college. Many of them qualify for the American Opportunity Credit, which is partially refundable. Yet, it gives a lot of really high benefit there too. We’re going to talk about it more in detail in a little bit.

There is also the Lifetime Learning credit which this one is really nice because it isn’t limited as far as how many times you can take the credit. you can. I use it as you go back to school especially, those who are like in graduate school, they’ve graduated, like got their bachelor’s degree, they’re going on to graduate school. Many can take advantage of this credit there. Now we’re going to take a short break. Now as we take a look at this and then when we do come back.

We’re going to look at what is a qualified expense to be able to take the American Opportunity credit or the Lifetime Learning credit? Going to touch on what those expenses are and what ones can take and of course, when they need to be paid. So, we’ll talk about that and a whole lot more. When we come back in a couple of minutes, on The Tax Answers Advisor with Marcelino Dodge on the Voice America Business Channel.

Follow us on Twitter at Voice America TRN. Get the lowdown on guests, your shows and your favorites. That’s Voice America TRN.

Are you wanting to grow wealth faster, save time and build a nest egg? Hire a tax pro who makes you money and does more than just file your tax return? Marcelino Dodge of Cash Tracks Financial identifies your key numbers, works year-round, improve your numbers, keeps you compliant and helps you achieve goals faster. Call Marcelino Dodge today, 719-336-8739 to schedule your free tax strategy review. Call 336-8739 or visit

Many people want to build wealth or grow their business faster, but do not know what specific numbers to look at that actually helped build monthly cash flow. Hire a tax pro who makes you money and does more than just filing your tax return? Marcelino Dodge of Cash Tracks Financial identifies your key numbers, works year-round to improve your numbers, keeps you compliant and helps you achieve goals faster. Schedule your free tax strategy review by calling 719-336-8739 or visit

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Hey Alexa, play by finding your frequency podcasts.

If that doesn’t work, try adding on TuneIn or on iHeartRadio or on Apple podcasts.

When it comes to business, you’ll find the experts here. Voice America Business Network.

This is The Tax Answers Advisor with host, Marcelino Dodge. To reach our program today, please call in the number is 1-866-472-5790. That’s 1-866-472-5790. You may also send an email to Now back to The Tax Answers Advisor.

Marcelino: Welcome back to The Tax Answers Advisor. This is Marcelino Dodge. I so much appreciate you listening to the program today. We’re going to continue on our discussion about the Education credits in relation to going to college. We talk a little bit just before the break regarding the American Opportunity tax credit, the Lifetime Learning credit. But one of the first parts you got to think about as you look at these is exactly, what expense qualifies me to take these tax credits? Well, initially, it’s actually pretty simple. It’s tuition fees, course materials record for enrollment at a qualify eligible institution. Pretty much pretty simple. Now, of course, these expenses do need to be paid in either 2020, for 2020 are actually, if you paid some tuition for 2021 in December then you can still take those amounts for 2020 if you pay them.

I mean for 2021, if you pay them in December of 2020, so it gets once again, it gets a little kind of confusing. There means talking from one year to the next but basically, if it was paid in 2020, you can take the credit. And this includes student activity fees which are oftentimes included. You get those little statements from the Universities or Community Colleges has all that list of fees that are on there.

There’s certain like student activity fees that they make all the students pay even though the students don’t necessarily do those activities, they or very many of the activities they have to pay those fees. So, anyway, those are included. Now of course, as mentioned earlier you must attend an eligible institution that participates in a student aid program through the Department of Education and that is, again very vital that you have that in vast majority of colleges that you participate or go to participate in that.

Unless, it’s some type of International School or something of that nature, then you can really maybe run into a little bit of an issue but overall it’s not going to be too much of an issue at least not from what I’ve encountered over the years at least the people I deal with. It’s always been actually some type of College or University that I’ve heard of because I deal with a lot of them in Colorado, here which is where I’m worth mainly worked from and so on.

I’ve seen from Texas and so on as well as throughout the country, so it’s very, very important to have that type of college and not to be going to some, I don’t know unusual college. Anyway, just keep that in mind. Now, a big issue I see with education credits more often than actually the items have already discussed is the communication between the student and the parent. Because as a professional here working with students and parents, and you know, I really commend students for how they want to get out.

They want to be independent. They want to file their own tax return, all kinds of these beautiful items that they want to do. Well, it can actually be to the detriment of both the student and the parent if when it comes to applying for these credits, and so on if the student just goes off and files their tax return even if they only made, well, if they didn’t make enough, really to support themselves.

Because items like student aid, and loans always really don’t count as money to support yourself, especially if you have a student that makes like $10,000 more or less in a year and they’re whining about taxes because they want to claim this education credit. Well, it’s a little bit, they may it maybe like you know, they really didn’t provide 50% or more of their support, parents may have still supported them.

And so it’s usually better that students and parents be willing to work together on this because one thing I do know from the time I’ve been working in taxes for 20 plus years, is that 99% of the time, the credits end up being better if the parents claim the student on their tax return, and if the student has, like some withholding or whatever to claim to get their taxes, you get taxes back, then go ahead and file a tax return.

But this is where students and parents is just need to work together. And parents all put like this, all parties need to be reasonable. And not just because there’s a lot of information out there about well, you can get if you go and file, you can get this amount of refundable credit back, or you can do this or you can do that. But once again, that leads back to the purpose of this program is accurate information.

Because last thing is student or even a parent wants to do when especially when it comes to these credits, or anything related to tax is talk to their neighbor, talk to their business associate go with whatever. They need to go and talk to their tax person, a tax professional like myself, which is why, as I’ve discussed so many times on this program, you need to not just have a tax person, that’s software, do-it-yourself software at that, or not just have a tax person who’s seasonal.

But have a tax person who’s available year-round, who can help to get through these issues. Because many times I have to go and remind parents especially as I’ve seen, young people grow up and go to college. I have to remind parents because they just overlook it, they don’t think about it. And as we do work on building year-round services for once, we guess got to remind. Okay, you got to think about this form 1098 T, from the institution that your son or daughter is attending for their education.

Make sure you get that and because sometimes it gets mixed up because well it has the student’s name on it. And so, which is understandable when you think about it, that the parents get the thinking, oh, wow, it’s has my son or daughter’s name on it. So it must go with all their tax stuff. Well, it’s not necessarily true, because if you’re claiming them as a dependent, which in many cases, a parent will be claiming this student as a dependent and thus be taken the tax credits.

Now, there’s only one credit for the qualifying education expenses that can be taken up on these tax returns. And so whoever takes it, which majority time probably should be the parents, that takes us credit there. Unless the student which I know, you know, there’s many students out there who do provide 50% or more of their support, and then would be eligible to take the full amount of these credits.

So it’s just very, very interesting and very special that situations need to be observed and it’s each individual. That’s why as I talk about this, and why it irritates me, sometimes that’s some people just make out these blanket recommendations on stuff. Well, that doesn’t work, because people are people and families are individual families. And what’s good for family A, isn’t good for family B, maybe they need to take a different credit, or maybe they need to do it a little bit differently.

So that’s where we got to keep that in mind in education credits. So as we take a closer look at this point, at the American Opportunity credit, in many cases, we see here the taxpayer will claim the student, their child’s son or daughter, and then you as a taxpayer would claim the credit on your tax return. Now, if the taxpayer for some reason does not claim the credit on their son or daughter, well, then only the student there can then claim the credit.

Now that part there, that’s where it gets a little testy because if the student still did not claim or is not able to really claim themselves because they didn’t provide 50% or more of their support, then they don’t really qualify to get the refundable portion of the of this credit, which is oftentimes what’s talked about, but you read the rules and you read the law is that usually once again, the taxpayer usually will claim their son or daughter, the student on the tax return.

The only time this student can then claim the whole credit is when they actually qualify to claim themselves because they’ve provided 50% or more of their support and they say there are some students out there that I don’t know how they do it. They’ll get out there on their own, make 15, $20,000 a year in W-2 wages, and they’ll still be going to college full time. You know, that’s a great credit to them. So once again, circumstances are different.

The American Opportunity credit, maximum credit is $2,500 per student that can be taken in a year with 40% of that is refundable, which is what makes that very nice for students, especially if there’s a low tax amount there. But also, that’s up to $4,000 of expenses they can take to get the maximum credit of $2,500. And as I mentioned, already, students must have provided over 50% of support for themselves to be able to claim this refundable portion.

Also, once again, as I said, scholarships that they receive, are not included in this amount of supporting themselves not considered that support when they have scholarships. This credit also starts phasing out at 80,000 and for single taxpayers and 160,000 for married filing joint taxpayers. That’s kind of normal. Everything has a phase out so, but this credit can be very good. I’ve used it quite a bit over the years but the key points in this once again, at all this has to be talked about if you’re going to take this out, American Opportunity Credit is once again, usually it’s students that are coming right out of high school, going right into college.

Now sometimes it’s a challenge, because so many high schools today are doing dual credit classes where the student is getting high school credit and college credit for the same class, which is a very wonderful thing but when it turns to the credits though, it gets a little murky because then you have the high school paying for the college, which course is great for the parents, and that can cause little issues as far as being able to obtain these credits. Now, as we think about what is an eligible student? Let’s take a look at that.

That’s what I’m saying, most of the time is their students going right out of high school into college. The eligible student is one who has not claimed the American Opportunity Credit in any for prior years because you can only take this credit for four years. And then after that year. On the other education credit, the Lifetime Learning Credit which we’re going to talk about in the next few moments.

Now, after this question, because there’s four questions on the form, you have to have not completed the first four years of undergraduate education. So basically, have you gone to college for at least four years. And you’re not at that, as long as that’s four years or less then of course you can take the American Opportunity Credit. Now you just can’t be doing this thing, I’m gonna go take one college class, and I’m going to claim the credit. No, actually you have to be enrolled in at least half time.

And then also you must be enrolled in some type of a degree, it could be an associate’s degree could be a bachelor’s degree, it could be some type of certificate program or some type of vocation. Yep, all of those have to be met for you to be able to qualify for this credit now, it’s really nice because, of course the majority of students I work with, they when they get the form 1098 T. It has a little box there, it’s in box eight that says, check if at least half time student, which there that’s a good indication that they are going to qualify.

Provides all the other qualifications are met that they qualify for the American Opportunity Credit. Now this one I’ve never quite figured out why this is a question to qualify for the credit but it is it mentions no felony convictions for possession or distribution of a controlled substance. So apparently they want to make sure only certain individuals qualify for this credit, vast majority of the time I’ve not had any problems with that question so after we go through the initial eligibility, then the student is qualified.

Now, you’ve determined the student is eligible, your son or daughter is eligible to take this credit, you’re eligible to take them on your tax return as a dependent. And then I was willing to take the credit based on these questions in what about expenses that have been paid, perhaps by you as the parent or expenses paid by the grandparent directly to the university or college, or other third parties. Well those expenses are paid, are eligible, even though they’re paid by a third party, a qualified student can take those expenses.

As part of the credit to take the credit, which is a very wonderful, wonderful thing for the student or whoever is eligible to take the credit. To be able to take up the $2,500 tax credit, as well as even it says if you qualify. Get the refundable portion of it as well, which once again go back to the parents if they’re claiming it for the student if they qualified to claim themselves as supporting themselves.

Now here’s something that is very great about this credit here, which because in the 1098 T. There’s some key boxes here, that relate to this one is box one, which, of course relates to payments received for qualified tuition and related expenses of course how much was actually paid to the College of university doesn’t necessarily identify the sources of the payment in that box, but it tells you how much now.

Sometimes, you do need to get a statement from the college because sometimes it’s 1098 T is off so we’re gonna say, be good to get that probably. Now there’s another box that says scholarships or grants. Now this box basically talks about, of course, non-taxable grants that they receive or scholarships and may have gone toward their tuition or other areas. Now, not all scholarships are the same. When a student receives a scholarship, some have a designated purpose, for example, when I went to college, I actually had a scholarship that was specifically for tuition and fees.

That’s all I could use it for. So that’s it went directly to the college paid my tuition and fees. And there are many scholarships that are like that. Now there are other scholarships that a student can get that do not have that restriction on them, which basically means this student can take that scholarship, and use that for, room, board, or other related parts of their education but not their tuition or fees, but even if they go that way, it still shows up on their 1098 T as a scholarship or grant which can reduce the amount of credit that they can get.

Now though, is give a quick example here, you had $8,000 of tuition. You receive $7,500, in scholarships. See under normal circumstances, you can only take the credit for $500 or $500 with that toward the credit. However, of that $7,500 of scholarships, there’s an amount of 2500 in this example that is considered unrestricted, or it’s an amount that says, you can use it for whatever you want.

Here’s what a student can do to be able to get a credit, they can take that $2,500 reported as income on the student’s tax return, most likely the students not going to pay tax on it anyway. But then what that does is that then allows, in this case particular example to take that initial $500 dollars, and then add 2500 to it so that then the parent that claims the student can then claim $3,000 of qualified education expenses.

It’s a very nifty deal that can be done with scholarships that are unrestricted or don’t have certain criteria on them or requirements for their use. So turn a non-taxable scholarship as taxable, but not necessarily taxable because most students are going to be under the filing threshold. And then you can get the full qualified credit so that’s where me, as a tax person needs to make sure that I see scholarships on there. Okay, we need to get the details on the scholarships.

What’s going on with these? Can you get me a statement that says, what these scholarships are? What these scholarships are for? What this detail is? So, the question that we need to be asking, or your tax person should be asking to clarify that because if there’s a credit there you can take just by tweaking stuff a little bit. Let’s do it. Let’s get the maximum credits we can and that pretty much summarizes up the American Opportunity Tax Credit at this time.

So we’re going to do is we’re going move into talking about the Lifetime Learning Credit, in particular, when we return in just a couple of minutes here on The Tax Answer Advisor with Marcelino Dodge here on The Voice America Business Channel.

Follow us on Twitter at Voice America TRN. Get the lowdown on guests, your shows and your favorites. That’s Voice America TRN.

Are you wanting to grow wealth faster, save time and build a nest egg? Hire a tax pro who makes you money and does more than just file your tax return? Marcelino Dodge of Cash Tracks Financial identifies your key numbers, works year-round, improve your numbers, keeps you compliant and helps you achieve goals faster. Call Marcelino Dodge today, 719-336-8739 to schedule your free tax strategy review. Call 336-8739 or visit

Many people want to build wealth or grow their business faster, but do not know what specific numbers to look at that actually helped build monthly cash flow. Hire a tax pro who makes you money and does more than just filing your tax return? Marcelino Dodge of Cash Tracks Financial identifies your key numbers, works year-round to improve your numbers, keeps you compliant and helps you achieve goals faster. Schedule your free tax strategy review by calling 719-336-8739 or visit

Voice America programs are now available on your favorite connected device, including Amazon, Alexa, and Google Home, through streams with Apple Podcasts tune it at I Heart Radio. Listening to your favorite show is as easy as saying the show name followed by the word podcasts.

Hey Alexa, play by finding your frequency podcasts.

If that doesn’t work, try adding on TuneIn or on iHeartRadio or on Apple podcasts.

When it comes to business, you’ll find the experts here. Voice America Business Network.

This is The Tax Answers Advisor with host, Marcelino Dodge. To reach our program today, please call in the number is 1-866-472-5790. That’s 1-866-472-5790. You may also send an email to Now back to The Tax Answers Advisor.

Marcelino: Welcome back to The Tax Answers Advisor. This is Marcelino Dodge, on a little bit of a roll today with education credits here on the program and just finished up talking about the American Opportunity Credit and how that can really be a big benefit to both parents and students as long as it’s coordinated right. So that both can get the full advantage of the credit. Now the next credit which really has a lot of flexibility, really more so than the American Opportunity Credit that is the Lifetime Learning Credit.

This one is I’ve used quite a bit. In some cases, it’s been around for quite a while, it was actually been around. It is 20% of $10,000 of educational expenses, which basically means that it’s a maximum of $2,000 of a credit that can be taken per student. Now, what is really nice about this credit is the fact that after you go four years and you use up the American Opportunity Credit, which many who’ve gone to certain professional fields have to go beyond just four years so they can only get the American Opportunity Credit for that limited time, but if you continue on to get your bachelor’s degree, you move on, you say.

Okay well, I’m gonna go on to learn a little bit more. I want to get my master’s degree maybe an MBA or whatever, and then maybe decide, wait a minute, I’m gonna go a little bit farther. I want to get my doctorate. Well, through all of that time after get your bachelor’s, you can take this credit each year until basically long you’re taking it through a qualified institution, you can take this credit each year that you’re getting education.

Now, where I’ve seen this credit you used a lot is with teachers that I work with, and them tax returns for is when they take a few college classes, some continually progress to move up on the pay scale that many of the school districts have. So they’ll take certain classes, eventually move up to get their master’s degrees or they get that t pay raise. Well, that whole time we’ve been working with them is that it if they’re paying this money out and getting those expenses to get that education done, they get that tax credit back. Now the key thing with the Lifetime Learning Credit though, is that basically it’s either like a use it or lose it kind of situation is that because it only goes against tax. So you have to have taxable income to be able to take advantage of this credit. And so with individuals, it’s very important to do this in the very important to plan accordingly.

Because there’s no limit on the number of students but make sure that if, because you can have parents still claiming students, especially if they used up the American Opportunity Credit a little too fast, then their students are under age 24. Parents may still be claiming them, and then getting this 20% refundable credit. I mean non-refundable credit because it’s only against tax because there’s no limit on the number of years, either that they can take this.

So it’s very, very anyway it’s just very simple really, is when it comes down to what this credit is. It phases out beginning at 59,000 if you’re single, 118,000 if you’re married, but this is going to increase in 2021. There was some of the new legislation, so we’re going to see how that works out once again, whenever they change something, it’s always kind of like let’s wait and see what’s going to happen with it.

Now if for some reason, the student is not claimed as a dependent by their parents on their tax return, then only the student can claim the deduction which once again this another one the situations where if a student does not provide 50% or more of their support, then they might as well be claimed on their parents tax return, so that they can get, so that this credit can be used. Now, there’s been a lot of talk and a lot of different things this year with because of the stimulus payments going out, should they claim the student should they not claim the student.

Well, it just depends. Did the student provide 50% or more of their support? If they didn’t, then they should be on the parents tax return, they’re not really eligible to claim themselves so, but that’s another discussion. And another thing to kind of get off on if one’s really, really need to get deeper into that. Now, one other deduction that I want to touch on a little bit here as the Tuition and Fees deduction, which is an actual what they call it above the line deduction this actually expired December 31st 2020.

So, some may be taking this on their 2020 tax returns. It’s a maximum deduction of $4,000 it’s an actual $4,000 that subtracted from your income. And you can only claim this credit, can only claim this is one of the other two tax credits that I mentioned, only if one of those is not used because you can only claim a credit on a student like Lifetime Learning or American Opportunity Credit or you can claim the Tuition and Fees deduction. You can only claim one of them.

Now, if you have, say, two students that you’re claiming, and one perhaps the American Opportunity Credit is better, you can claim that. And for another, if this Tuition and Fees deduction for 2020 is better, you can claim that on that student. So, you can do two different things there but it has to be two different students. So, if you only do one, one or the other. Once again, what is an eligible student, it could be the taxpayer, this case could be the spouse, could be a dependent on the tax return.

So that’s what I was saying earlier could be, if you’re a married filing joint, it could be maybe the wife has been taking some classes in the Tuition and Fees deduction, she’s eligible for that and would be taking that whereas your son or daughter is going to college and qualifies for the American Opportunity Credit, you can take that on your student. So very nice once again and then enroll be enrolled at one or more eligible institutions.

These expenses for Tuition and Fees deduction, to include books, supplies, equipment, all of these that are paid to the institution as a condition of enrollment. Now, this does include which is what’s really nice here. And this can go for the other credits as well. It includes when you paid expenses with borrowed funds, so say if you had to borrow $4,000 for tuition fees, books, supplies, all paid to the institution. And yes, those items can be as part of the Tuition and Fees deduction.

Now, if you did happen to receive though, once again, tax free assistance, scholarship, grants, maybe some type of assistance through the VA or other tax free type of programs, then this deduction is. So it’s just some thoughts there to keep in mind with the Tuition and Fees deduction now, and I don’t know if it’s going to get renewed or not but I just know that it’s expired a 2020. It’s not here for 2021, but we know how Congress is they could go back and say, okay, well, come November, December which is when they’re well or well known for making changes.

Well, we’re going to bring back the Tuition and Fees deduction for 2021. So anyway, what I would say is keep good track of your records through the year, if you’re going to college and just depending on where we are in November or December be ready just in case. Because we just don’t know what they’re going to do. And with the Tuition and Fees deduction. If a student is not claimed as a dependent on a tax return for the tuition and fees deduction then basically, that just kind of leaves it out there.

Nobody can take the deduction, then it just basically lost. And then once again, it’s one of those things depends on what’s going to be better overall for the taxpayer is will it really have an effect on the tax return. All of these areas are all just what’s there as to what’s, what really needs to be done what really can be done, it’s best for you as a taxpayer. Which is why once again as I relate back to and go back to the fact that, do-i- yourself software that says they have tax experts helping you do your tax return, because it’s free. Well, remember the old adage, you get what you pay for. Well, oftentimes, because I’ve talked about it in other programs and other times of how important it is to have a tax person that is available all the time, not just when you’re doing your tax return. Because you may be, you may feel your tax return and you may very well could but yet, there other parts of your life, though, where you may need a tax person to help you to wade through to maneuver through, perhaps, what do I need to do.

If some type work related comes along, or as I’m talking about here. I have a student, getting ready to go to college.

What’s the tax benefits there? Are you just going to read tax articles or look stuff up on the internet? Which once again, as I tell you, so much conflicting information on that. People out there writing information. You really need someone you can build a relationship with that can come to know you personally, know your circumstances, and be able to really help you to coordinate these credits.

Like these education credits as I’ve been talking about today, to maneuver through these and to figure you to help you to know, okay, yeah, this is what I need to be doing with my student. My son or daughter that’s going to college soon. I need to visit with them and say, this is what we’d like to look ahead for, this what we need to do, that way we get the maximum tax benefits under the current law, and having a good tax advisor, like Cash Tracks Financial, Marcelino Dodge here can help you to maneuver through these areas.

And that’s why we do a custom process of individuals, helping to achieve personal goals, business goals. That includes your tax work, and helps you to put together your action plan, which is what is really necessary as your children age, and you get ready to let go and they go on to college and they go up. Are we planning for things like the children’s education? Or what tools are we setting aside to do that over taking advantage of the means? How am I going to muddle through the new tax laws that are coming through?

Am I going to decide to opt out of the advanced payments of the Child Tax Credit, which is actually something I’m probably going to be recommending to clients to do because it’s just going to be a mess. So yes, me, Marcelino dodge here Cash Tracks Financial at 844-394-4287, or email me I’m here to help you to muddle through things such as these education credits as I talked about today, because there’s so much out there and so much information that is not personalized.

And the only way you can really understand this information is, how does it apply to you personally, which is what I endeavor to do is to work with you, year-round, have proactive solutions to meet with you in person or by video conference, no matter where you are. Because as an enrolled agent, I have that flexibility to work with anyone across the country which is what I really love doing, helping people to pay as little tax as possible. Because that is the goal of Cash Tracks Financial to help you to take advantage of all of these deductions education credits as I’m talking about today. But at the same time, understand that there are certain business things, or business areas that you should avoid, and not do which is some areas I’m gonna talk about in a future program.

Because, as a business owner, there’s tax risks that you probably just don’t want to take, because they can come back and really harm you in the long run, especially if you have a disgruntled employee. Yes, we’re gonna look forward to talking to you, once again, explained to you more about the wonderful world of taxes I come as I like to call it because there’s so much out there, so much to clearly explain and to get out. So that ones have a good understanding that they indeed do pay as little tax as possible.

So we’re gonna say, thank you! As I look forward to talking to you all again and next week it’s 9am Pacific, and I really appreciate again you’re listening to The Tax Answers Advisor. I am Marcelino dodge here on The Voice America Business Channel.Thank you for listening to The Tax Answers Advisor with host, Marcelino Dodge. We’ll be back again next Thursday at 12 noon Eastern time, and 9am Pacific time, on The Voice America Business Channel. We’ll have more to share next week.

Cash Tracks Financial Inc.
117 W Beech St
Lamar, CO 81052
Office:(719) 336-8739
Toll Free: (844) 394-4287
Fax: (719) 336-8799


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When you need a financial or tax advisor, tax prep, insurance, or business guidance contact Cash Tracks Financial Inc., serving Lamar Coloardo.

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