As a military spouse tax time can be a bit stressful to say the least -- here's answers to some of the most common questions.
Editor's Note: This article has been updated to reflect current programs and tax laws.
Military service men and women, who recently enrolled in continuing education programs or signed up for skills building classes, have several government reimbursement programs and income tax benefits that can help them pay for these valued courses.
Perhaps the most popular option for servicemembers is the GI Bill. This bill provides all active-duty enlistees and certain veterans with reimbursement for up to 36 months of college, technical or vocational courses, apprenticeships, job training and more. There is also a version of the GI Bill designated for men and women enrolled in the Selected Reserve of the Army, Navy, Air Force, Marine Corps, and Coast Guard, as well as the Army and Air National Guard. The educational benefits provided by the GI Bill are only available to military personnel and eligible veterans -- generally, spouses and dependents of veterans are not eligible unless they are granted benefits through Post-9/11 GI Bill transferability or programs like the VA's Spouse and Dependents Education Assistance (DEA) program. Visit the Military.com GI Bill section to learn more.
Importantly, service men and women should be aware that payments received through the GI Bill programs are not treated as income for tax purposes. Therefore, expenses covered by MGIB payments cannot be claimed for any other education credits or deductions, including itemized deductions on Schedule A. For more information regarding the MGIB and REAP programs.
Beyond government reimbursement programs, there are two federal tax credits associated with educational expenses the American Opportunity Credit and the Lifetime Learning Credit.
The American Opportunity Credit provides up to a $2,500 credit per student for qualified tuition and fees paid during the first two years of higher education. The student must seek a degree and meet other requirements.
The Lifetime Learning Credit is available for 20 percent of the first $10,000 of tuition expenses (up to a maximum of $2,000) per tax return for courses students take to acquire or improve job skills. Unlike the American Opportunity Credit , the Lifetime Learning Credit is available for an unlimited number of years, and students do not have to seek a degree to qualify for it.
The Tuition and Fees Deduction is another way service men and women can help defray educational costs. It allows them to deduct qualified college tuition and related expenses of up to $2,000. This deduction is an adjustment to income, which means the deduction will reduce the amount of your income subject to tax. The Tuition and Fees Deduction may be beneficial to you if you do not qualify for the American opportunity or lifetime learning credits.
NOTE: You cannot claim the American Opportunity and Lifetime Learning Credits for the same student in the same year. You also cannot claim any of the credits if you claim a tuition and fees deduction for the same student in the same year. To qualify for an education credit, you must pay post-secondary tuition and certain related expenses for yourself, your spouse or your dependent. The credit may be claimed by the parent or the student, but not by both. Students who are claimed as a dependent cannot claim the credit.
In closing, consider prepaying a January tuition payment by Dec. 31. Doing so will increase the amount of annual tuition that can be claimed under the Hope or Lifetime Learning credits, as well as the Tuition and Fees Deduction.
For additional information regarding education benefits, please contact your local Jackson Hewitt Tax office to arrange an appointment with a tax preparer. To locate the nearest office, log on to www.jacksonhewitt.com and click on the office locator feature or call 1-800-234-1040.