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dmac1040
New Member

Qualifying for the education tax credit, slightly above the income level needed to qualify.

Last year we were able to use the education tax credit, and that resulted in a $4K credit, which put us close to break even on taxes withheld and taxes owed. This year we made $13K over the income limit that determines qualification, which means our we can't use the $4K tax credit (we made an extra $13K, and our actual taxes went up by $4K. Not even the highest tax bracket in America sees that % in tax increase year over year).

 

Is there anything we can do to reduce our income for 2019 from $173K to $160K? Can we purchase IRAs? Married filing jointly, both over 50 in 2019.

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2 Replies

Qualifying for the education tax credit, slightly above the income level needed to qualify.

While you don’t get the full credit with income over $160,000 you do get some credit. 

Regarding the IRA, you can each contribute $7,000. Whether the contribution will be an adjustment to income depends on whether you have a retirement plan at work.  You can put the contributions into Turbotax and see the effect on your tax situation. 

dmac1040
New Member

Qualifying for the education tax credit, slightly above the income level needed to qualify.

I just entered the information for wife and daughter. Both had 1098-T forms. Neither one lowered my taxes, in fact they went up because of the scholarship my wife got. I think $160K is a hard cutoff, you get zero tax benefit for paying for college for anyone in the family. We are seriously paying and additional $4K in taxes on $13K of additional income.

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