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By now you know that the Tax Cuts and Jobs Act (TCJA) signed into legislation last December will have a major impact on your tax filings for the years 2018 through 2025. We at Schneider Downs are still working through each aspect as year-end tax projections are being completed for our clients. An area of attention for those of us with student dependents is what has changed under TCJA related to education expenses.
In October 2018, the IRS issued Publication 5307 to provide an overview of TCJA as it relates to individuals. This article focuses specifically on education expenses.
Tuition Assistance Programs, commonly referred to as Qualified Tuition Plans (QTP) or 529 Plans, are a savings vehicle many of us use for our childrens' higher education expenses. These plans were first developed in 1996 to allow taxpayers a tax-advantaged way to save for qualified higher education expenses for designated beneficiaries.
The TCJA legislation has expanded QTPs in two major ways:
Education Credits and Deductions, specifically, the student loan interest deduction and Lifetime Learning Credit, have both been retained by the TCJA. Additionally, the American Opportunity Credit is still in place. Only the Tuition and Fees deduction has been allowed to expire as of the end of 2017. That was an "above the line" (before adjusted gross income) deduction related to tuition, fees and books/supplies. Over the last few years, it’s been resurrected with an extenders package, so this may happen again for 2018.
You may wish to review an article written last year that describes the types of expenses eligible for each of the tax benefit programs. The main update to that specific article is that, as of this writing, the Tuition and Fees Deduction is not available for 2018.
Education costs for our children is a maze, but, we are available to help you through it!
With the changes enacted by the Tax Cuts and Jobs Act, you may wish to discuss your questions related to this topic or any others with your Schneider Downs & Co. team. Please feel free to reach out with all questions as we are available to assist you.
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