Tax Newsletter

• Award of Back Wages Taxed the Year Wages Are Actually Paid
  The U.S. Supreme Court has ruled that awards of back wages to employees are subject to federal taxation according to the year in which the wages are actually paid, not the year in which the wages should have been paid or were actually... Read more.
• The Benefits of Employee Leasing on Workers' Compensation and Other Laws
  Over the past several decades it has become increasingly expensive to hire and maintain employees. A large part of the expense relates to government programs and reporting requirements, but accounting costs related to employees have... Read more.
• Estate Tax Rates in 2013
  Much to the relief of many, the American Taxpayer Relief Act of 2012 (“2012 Tax Act”) was enacted in the beginning of 2013, making permanent many of the tax benefits that were scheduled to expire at the end of 2012. The... Read more.
• Certain Real Property May Qualify for Special Use Valuation
  Calculation of the Value of Estate Assets Estate taxes are calculated based upon the value of the assets in the estate. One duty of the executor or administrator is to inventory all estate assets and assign a... Read more.

• Rumors on social media suggest taxes are going up next year—here’s what you need to know
• Wealthy families, hoping to save on taxes, are in a holding pattern. Here’s why
• District grants disputed $46 million tax abatement to Adams Morgan hotel
• Biden’s Tax Increase On Death That No One Is Talking About
• These 3 tax moves will help you save, regardless of who wins the election

Tax Credit for Higher Education Costs

You may be able to receive tax benefits if you are saving or paying for expenses related to a higher education, either for yourself or for a family member. There are a number of tax benefits that you may be entitled to.

Educational Tax Credits

The American Opportunity Credit (Hope Credit) and the Lifetime Learning Credit apply to tuition and enrollment fee expenses. Only one of these can be applied per qualified student per year. Different rules apply to each separate tax credit. However, neither credit can be used by households with incomes of $62,000 or more or for households of combined incomes of $124,000 or more (joint returns).

Individual Retirement Accounts (IRAs)

The education IRA and traditional IRA may be applied to tuition expenses, as well as expenses related to books, supplies, and room and board. Withdrawals from an education IRA account are tax-free, with limitations.

Student Loan Interest Tax Deductions

Interest paid on student loans may be deductible. This only applies to the first 60 months of loan interest. The loans must also be used for at least half-time in a degree program.

Qualified State Tuition Programs

Under these programs, future tuition expenses are prepaid, and earnings are not taxed until they are withdrawn.

U. S. Savings Bonds

The interest earned is excludable from income. However, this only applies to specific qualified bonds.

Employer’s Educational Assistance Programs

Like savings bonds, employer benefits are excludable from income, with a $5,250 annual limit.

As some higher education benefits will not allow you to claim two educational benefits simultaneously, those taxpayers interested in taking advantage of higher education tax benefits should investigate the specific terms of the relevant benefit programs.

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