It can be a sad day in Minnesota when summer ends. The official end to summer, the autumnal equinox, came early this morning, according to Almanac.com. The exact date of the unofficial end of summer has been the subject of some debate. Generally, Labor Day marks the end of flip-flops and the return to serious business. This year, though, Labor Day came a little late for lawmakers, and the first day of school, the other unofficial end of summer, fell before the holiday -- even at the University of Minnesota.
Either way, by now we should all be back to work and settled into our winter routines. And, of course, that means taking some time to review our tax plan for the rest of the year. There is still time to protect yourself and your family from a major tax bill coming due in April.
For those of us with kids in college -- heck, for those of us who are in school, the picture could be significantly different. According to a tax and accounting specialist at Thomson Reuters, we should keep a handful of credits and deductions in mind as the tax year winds down.
For example, there is the American Opportunity Tax Credit: The credit is worth as much as $2,500 for 2015, but the expenses must be for a student who qualifies for the tax break. There are no age limits, but the student must be enrolled in a post-secondary program that will confer a degree, certificate or other type of credential upon completion. The student must be in the first four years of the program and must be carrying at least half of a full-time class load during at least one academic period (semester, trimester, quarter) during the tax year. Finally, the student cannot have a felony drug conviction on his or her record.
Note that the student must be enrolled at least half-time. With tuition costs so high these days, it would make sense that students would hold down part- or full-time jobs while going to school. Balance is important here: If work overtakes education and the class load dwindles, the AOTC will be off the table.
There may be an alternative, though. We'll explain that and review some other deductions and credits in our next email.
Source: Accounting Today, "A Back-to-School Tax Break Refresher," Michael Sonnenblick, Sept. 22, 2015