Each year, Congress and the IRS make important changes in college education credit not just for students in Greeley but also those attending college in the Fort Collins area and across the country. This year is no different as some beneficial adjustments have been made to address the effects of the COVID-19 pandemic.

The Biden administration has set in motion laws that give student loan forgiveness and allow student loan borrowers to also get easily approved for a mortgage. This is good news for those who have been having a hard time dealing with job loss or limited earning opportunities. The laws will help uplift the country’s economy and give people with debt issues the to still own a house.

The latest information on the college education tax credit for students attending college in Greeley, Fort Collins, or nearby will give borrowers a huge relief as they ease the financial burdens during these challenging times.

Colorado Student Loan Interest: Gov’t Offers the Much-Needed Tax Credits for College Students

The pandemic has affected every sector of society, including college students. But fret not, the government temporarily suspends loan payments, stops the collections of defaulted loans, and offers 0% interest loan payments. This emergency financial relief is effective until September 30, 2021.

Also included in the American Rescue Plan that Biden signed in March is a provision that supports tax-free student loan forgiveness. This college education credit for taxes applies to loans issued between January 1, 2021, and December 31, 2025.

The American Opportunity Credit: Take Advantage of the College Tax Credit

The flexible college education tax for credits has been helping parents and students in financing a college education. The American Opportunity Credit is a form of financial assistance for college students offering bigger tax savings.

Requirements to Qualify for the American Opportunity Credit in Colorado

A college education is a top priority for many but its premium cost can be discouraging. It’s a good thing that tax credits for college students in Colorado such as the American Opportunity Credit exists. It gives young individuals something positive to look forward to.

But there are eligibility requirements:

• You must be currently enrolled but have not yet completed the first four years of college education

• You must have completed at least half-time in a program that leads to a college degree

The college education credit for taxes is not available to:

• Graduate students
• Those who have already availed of the education tax credits for more than four tax years
• Those who are convicted felons with drug-related crimes

• Those with a $90,000 income for single filing and $180,000 for married individuals filing jointly

The college education tax credit for students in Greeley, Fort Collins, or other nearby colleges covers payment for tuition and school supplies including books. It is based on 100% of the first $2,000 spent on qualifying college expenses and 25% of the next $2,000 adding up to a maximum annual credit per student of $2,500.

Last year, the credit has decreased for single taxpayers having a modified adjusted income of more than $80,000. Married taxpayers with a combined modified adjusted gross income of $160,000 are also affected.

The Lifetime Learning Credit

In December 2020, the new stimulus bill was passed under the name Consolidated Appropriations Act or CAA in response to the COVID-19 pandemic. The CAA includes college tax credit rates covering tuition and school expense rates.

The Lifetime Learning Credit is a college education credit that offers a maximum of $2000 credits per year before the pandemic. This is for anyone who pays for tuition at any educational institution of higher learning. Vocational school classes in Colorado also qualify for the lifetime learning credit. You do not have to seek a degree program, and you do not have to be enrolled as a full-time student to take advantage of this deduction.

Since the CAA was passed, college tax credits have increased to $2500 per year. While the American Opportunity Tax Credit and Lifetime Learning Credit have the same rates, the latter is non-refundable. However, it offsets income tax. This means if you qualify for the Lifetime Learning Credit, your income tax will decrease.

Deduction for Teacher’s Expenses

As students in Greeley enjoy the college education credit for taxes, teachers can, too! The college education credit for taxes extends to teachers or educators rendering at least 900 hours in one school year. Specifically, you should be one of the following:

• Teacher
• Teacher’s Aide
• Instructor
• Principal
• Counselor

The tax credit covers out-of-pocket expenses, such as:

• Teaching materials like school supplies, school-related printed and digital materials, and learning tools, equipment, and services (books, computer or laptop, software, etc.)
• Cost of professional development courses
• Health and physical education courses (only if they are related to athletics)

Under the COVID-19 Relief Act, teachers and educators are also allowed to reimburse expenses for COVID-related supplies including:

• Face masks
• Disinfectants or sanitizers (air purifiers, hand soap, hand sanitizers)
• Disposable gloves
• Materials for enforcing social distancing (chalk or paint, tape, barriers)
• Items used to prevent COVID-19 spread as recommended by the Centers for Disease Control and Prevention (CDC)

You can deduct up to $250 for these materials purchased with your personal funds. It applies to purchases made after March 12, 2020.

For all educational deductions, be sure and have your tax service provide you with a comprehensive list. This way, you can take advantage of every educational deduction available.

A Fort Collins Tax Expert Will Help You Understand These College Education Tax Credits for Students Attending College in Colorado

These college education tax credits in Colorado are available not only to students at the University of Northern Colorado in Greeley or Colorado State University in Fort Collins but to most students in Colorado and across the country. They may not seem much, but they offer huge savings if you combine them. This is why it is a good idea to have the backing of a tax service when it comes to financial accounting. There are a number of COVID-19 and regular tax reliefs available today, which can significantly help if you start taking advantage of any in which you qualify.  

Talking to a local accounting and tax expert will help you understand the latest updates on each college tax credit that you can apply for. We at Steven J. Wick & Associates, P.C. are always updated. We can provide you with complete lists of requirements for any tax credit program that you want to benefit from. 

Steven J Wick and Associates, P.C.’s experienced CPA will help you with college tax credits. We also offer payroll outsourcing and tax preparation services, business consultation, and CFO services.  

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