The American Taxpayer Relief Act of 2012

Most Confusing Parts Of The Income Tax Code, Part 4: Education Tax Incentives

Many provisions of the Internal Revenue Code are complicated. Proper interpretation of the rules and regulations contained in these provisions requires the assistance of an experienced and knowledgeable tax professional. The fourth part of our series about the most confusing provisions of the Internal Revenue Code addresses education tax incentives.

Why Is It Confusing?

  • There are a large list of incentives from which to choose
  • New stricter requirements to establish eligibility for some incentives
  • Determining eligibility is a complicated, arduous, lengthy process
  • Difficulty in determining the correct and appropriate benefit

Proving Education Tax Break Eligibility In 2016

Proving Education Tax Break Eligibility In 2016The American Taxpayer Relief Act of 2012 extended the American Opportunity Tax Credit (AOTC) through December 31, 2017. This tax credit assists with the cost of higher education expenses such as tuition, course materials and other certain eligible fees for four years, which differs from the Hope scholarship credit because the credit may be claimed for four years instead of the two allowed under the Hope credit.

Congress’ Extension Of Expired Deductions

Congress' Extension Of Expired DeductionsAs 2016 starts to move forward, Congress seems especially less likely to agree on legislation extending all the tax breaks that have currently expired. S. 1946, Tax Relief Extension Act of 2015, generally provides for a two-year extension while the Tax Cuts for America Act of 2015, H.R. 1808, has only seven tax provisions, and the bill would extend those benefits for only 2015 retroactively.

In recent tax years, taxpayers have faced a great deal of uncertainty in determining whether they can continually and regularly depend on tax incentives to help them lower their taxes. At the beginning of 2013, Congress enacted the American Taxpayer Relief Act of 2012, which extended 51 provisions for two years retroactively through the beginning of 2012 and through 2013.