As college students head back to campus, their parents are double-checking their bank accounts. Fortunately, there are many different options for financial aid. There are also a number of education tax benefits that you should be aware of. Don’t wait until tax time to study up on these laws. Here are a few things the staff at Blackwell’s Tax Service wants you to know before you file your tax returns.

Know if your child qualifies as a dependent.

The first step to claiming any education tax benefits is knowing whether your child still qualifies as a dependent. Many students can be claimed as dependents due to their lack of income. Your child must be 24 or younger, a full-time student, and be able to prove that they receive significant financial support from you.

Know the different types of educational tax benefits.

There are four main types of educational tax benefits. Each one has its own specific rules and regulations. With this in mind, make sure you seek professional tax advice from a tax preparation firm.

  1. College savings plan: This allows any deposited earnings or savings to remain tax-free until you remove them from the account. However, you can also set up a plan where distributed money remains tax-free. You may also have a plan that includes all of the above.
  2. Education tax credits: Education tax credits diminish the overall amount of owed income tax.
  3. Exclusion of income: Did your child get a scholarship? This tax benefit omits specific educational benefits, like scholarships, from being classified as income when it comes time to file your taxes.
  4. Tax deductions: Deductions lower the income amount that your income taxes are based on.

Don’t hesitate to get tax preparation help if you have a student in college. Blackwell’s Tax Service will help you get the most from your tax returns. Call our Fort Mill, SC office to learn more.