National Association of Tax Professionals (NATP) Appleton, WI – With children and teachers back in school, the National Association of Tax Professionals (NATP) reminds educators, parents, and students that the IRS has various education-related deductions and credits that can benefit them when filing their 2007 federal income tax return.
“The start of the school year is a good time to remind parents, students, and teachers to save all receipts related to tax-advantaged education expenses,” said IRS Acting Commissioner Linda Stiff. “Good recordkeeping makes sense because it can help avoid missing a deduction or credit at tax time.”
The educator expense deduction allows teachers and other educators to deduct the cost of books, supplies, equipment, and software used in the classroom. Eligible educators include those who work at least 900 hours during a school year as a teacher, instructor, counselor, principal, or aide in the public or private elementary or secondary school.
For 2007, educators can deduct up to $250 for supplies, whether or not deductions are itemized on their Schedule A. According to a study prepared by the Quality Education Data, Inc., teachers nationally spend an average of $475 of their own money on classroom supplies and materials each year. Currently, this deduction is scheduled to expire at the end of this year.
College Cost Deductions and Tax Credits Help Students and Their Parents
The IRS presently has three key tax breaks including the tuition and fees deduction, the Hope Credit, and the Lifetime Learning Credit, all designed to help parents and students pay for the cost of post-secondary education.
The Hope Credit is a tax credit for college students in their first two years of college. It provides a tax credit of up to $1,650 on the first $2,200 of college tuition and fees. The Lifetime Learning Credit is a tax credit for any person who takes college classes. It provides a tax credit of up to $2,000 on the first $10,000 of college tuition and fees. Unlike the Hope Credit, you only need to be enrolled in at least one course to qualify. Income limits and other special rules apply to each of these provisions.
“Generally speaking, a tax credit is worth more than a tax deduction,” explained Cindy Hockenberry, EA, NATP Tax Information Analyst. “A tax credit reduces your tax liability dollar for dollar, while a deduction reduces taxes on a percentage basis depending on your marginal tax bracket.”
Eligible parents and students looking for more information about these education tax breaks should refer to the IRS Publication 970, Tax Benefits for Education. It can be found on the web at IRS.gov, or can be requested, free of charge, by calling the IRS at 1.800.TAX.FORM (820-3676).
Members of NATP work at offices that assist over 11 million taxpayers with tax preparation and planning. The average NATP member has been in the tax business for over 20 years and holds a tax/financial designation and/or a college degree. NATP has more than 18,000 members nationwide. Members include individual tax preparers, enrolled agents, certified public accountants, accountants, attorneys, and financial planners. Learn more at www.natptax.com.
NATP is a nonprofit professional association founded in 1979 to serve professionals working in all areas of tax practice through professional education, tax research, and products. The national headquarters, located in Appleton, WI, employs over 40 staff members.
Posted on 2007-09-25 04:30:04