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Video instructions and help with filling out and completing Fill Form 2220 Credits

Instructions and Help about Fill Form 2220 Credits

We talking about the American Opportunity Tax Credit to make the video a little easier to watch and to not leave out any important details I broke this video up into two parts I hope you enjoy let's get this going what's going on guys MK of MK chip here today we're going to be talking about taxes specifically education credits now there's two main types of education credits one is the American opportunities credit in two is the Lifetime Learning credit today specifically we're gonna be talking about the American opportunities credit only so stay tuned throughout today's videos I'll be showing a number of pictures and call them slides however you want to think of it but if it's going too fast any time just feel free to pause the video and you can read it look it over and then we can resume from there you know like I said in this video I'll just be focusing on the American Opportunity Credit I will be making another video at a later time to talk about the Lifetime Learning credit now the first question you might have your mind is we're gonna talk about credits how I know which ones better well let me just tell you straight up before we even going down this path if you have the choice between the American opportunities credit and the Lifetime Learning credit always take the American opportunities credit you will come out far better so you might be asking how long is this credit going to be around for well I can tell you this the path act of 2022 made the American opportunities credit permanent now one thing you have to consider is that when they say permanent when it comes to our Congress it might not mean permanent but for the time being its permanent so no worries there so if you're going to school you might be wondering how many years can I claim this credit and the answer is four you can claim this credit for four years now the good news is you don't have to go for consecutive years in a row so for example let's say you start out of college and you only go for your junior I'm sorry your freshman in your sophomore year then you want to take a little break go tour Italy whatever you like to do none of my business but you can come back and for your junior in your senior year those two years that you still have not claimed that credit for you can claim it at that point so you don't have to go consecutively so what expenses count towards your education credit well expenses of course for your tuition fees and enrollment type of activities your your books your equipment and your supplies okay so all these things count towards the education our qualified education expenses now one thing that's nice about the American opportunities credit is that you can actually deduct those expenses then aren't going directly to a school what do I mean by that you can buy it's like you don't have to buy the book directly at the bookstore you can buy your book at Amazon or Ebay for your textbooks in some of your supplies which is great because you can still deduct that but it's very important to maintain proper receipts and records the next thing you might be thinking about is okay so if those are the expenses that qualify what are some expenses that don't qualify expenses that do not qualify would include room and board transportation insurance medical expenses student fees unless required as a condition of enrollment attendance basically any fees that you paid with tax-free money meaning money from grants or scholarships UK you can't use tax-free money and still also claim deduction with tax-free money you guys got it okay same expenses use for other tax deduction credit or educational benefits so you know if let's say you spend a hundred dollars and supplies well you can't deduct that twice under another type of credit or another type of fee no double-dipping that's how you get in trouble so how much is this american opportunities credit worth the answer is $2,500 the important thing to emphasize here that I really want to emphasize to you is it's $2,500 her student okay so if you have happen to have two kids in college or you and your wife are both in college then you can in this example with two people in college at the same time means you can deduct up to $5,000 for the credit so if you have three people up to $7,500 see it you got it $2,500 per person question this question is the credit refundable this particular credit is which makes it even better so let's say you file your tax return you don't owe any tax so you're like oh great I'm proud I might not get a benefit no I'm not with this credit you actually do so you can get up to forty percent of the total credit amount which is a thousand dollars you can say you can still get a thousand dollar refund even if you with this credit even if you didn't know any tax how's the math work it's right there boom all right so I'll talk about this credit but who can claim the credit well in determining who can claim the credit the main thing from all the research I've done in my experience is that you want to make sure that you're claiming yourself if you want to take the credit you have to claim be able to claim yourself as an exemption okay so if somebody like let's say your so if you if you're the parents and you have a student in school let's say they're 19 20 or whatever okay well even if they out of their own pocket pay.

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