year end tax tipHere’s a quick year end tax tip or two.

If you’re the parent of a college student, you may be able to lower your 2022 tax bill by prepaying some 2023 tuition. The American Opportunity Tax Credit is worth up to $2,500 for each student in their first four years of undergraduate study. This is a tax credit, not a deduction, so you don’t need to itemize to take advantage of the opportunity.

The Lifetime Learning Credit is another way to reduce your tax bill if you plan on taking classes yourself in 2023. By prepaying the January bill before the end of 2022, you can claim up to 20 percent of your costs for tuition, fees, and books, up to $2,000. This credit is not limited to undergraduate expenses, nor to full-time students.

For both credits, married couples filing jointly with modified adjusted joint income (MAGI) of up to $160,000 can claim the full amount. Those with a MAGI of up to $180,000 can claim a partial amount.

Want another year end tax tip? Read our article about tax loss harvesting.

Source: Sandra Block, Senior Editor, Kiplinger’s Personal Finance.
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