How does ESPlanner treat Special Expenditures - College Tuition? College Tuition creates a tax credit (Hope Credit or Lifetime Learning Credit), not a tax deduction, and is limited in amount.
If it already accounts for it in the tax calculation, then I do not want to account for it twice, but with 3 kids I do want to account for it once!javascript:emoticon(':shock:')
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ESPlanner actually doesn't know about any sort of specific tax deduction or credit other than the ones for which we have specific input screens (real estate, housing, etc). The special expenditures "label" is for your convenience only and must be additionally qualified by deductible or excludable from adjusted gross income in order for ESPlanner to treat them appropriately in the tax routines. So, ESPlanner won't double deduct the deduction and/or credit because it doesn't know about it unless you tell it.
Best,
Dick Munroe
Thanks for reply. So since program does not know anything about tax credits, would you recommend doing something like this?
1. Create Special Expenditures - College Tuition as a non-tax-related expense
2. Create Special Receipt - Hope Tuition Credit as a non-tax-related receipt?
I'm not familiar with the Hope Tuition Credit, but in general, enter non-deductible college expenses as just that, special expenditures with no tax consequence. Assuming the Hope Credit is, more or less, a tax-free gift of money, then you would enter it as a not taxable special receipt.
Best,
Dick Munroe
Hope and Lifetime Learning Credits
2007
For 2007, the amount of your Hope or lifetime learning credit is phased out (gradually reduced) if your modified adjusted gross income (MAGI) is between $47,000 and $57,000 ($94,000 and $114,000 if you file a joint return). You cannot claim an education credit if your MAGI is $57,000 or more ($114,000 or more if you file a joint return).
For more information, see chapters 2 and 3 in Publication 970, Tax Benefits for Education.
2008
Beginning in 2008, the following changes apply to the Hope and lifetime learning (education) credits.
Income limits for credit reduction increased. For 2008, the amount of your Hope or lifetime learning credit is phased out (gradually reduced) if your modified adjusted gross income (MAGI) is between $48,000 and $58,000 ($96,000 and $116,000 if you file a joint return). You cannot claim an education credit if your MAGI is $58,000 or more ($116,000 or more if you file a joint return).
Hope credit. Beginning in 2008, the amount of the Hope credit (per eligible student) is the sum of:
100% of the first $1,200 of qualified education expenses you paid for the eligible student, and
50% of the next $1,200 of qualified education expenses you paid for that student.
The maximum amount of Hope credit you can claim in 2008 is $1,800 per student