05/30/2025
Most married couples filing jointly did not itemize and used the $24,800 standard deduction in 2020 (this was $25,100 in 2021). This should be kept in mind as such things as charitable contributions, mortgage interest and real estate taxes may not impact your tax return as much as they did in the past.
In many instances individuals that have children in college are entitled to education credits either through the American Opportunity Credit or the Lifetime Learning credit. Both of these credits, however, have income limitations and therefore a credit you are counting on now may not be available to you. In some instances, it may make sense for a parent to not claim the child as a deduction and allow the child to claim the credit.
While this may raise the tax liability on the parents, the overall taxes on the family may be lower. Additionally, the American Opportunity Credit is only available for the first 4 years of college and has a significantly higher income phaseout then the Lifetime learning Credit. Taxpayers should be alert as to how many years they have taken the American Opportunity credit and should plan for a potential reduced or completely phased out credit if they have already used the credit for 4 years.
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