Hyden, Miron & Foster, PLLC Law Blog

Wednesday, September 2, 2015

Summer Tax Considerations Part 1

Summer brings with it barbeques, vacations and other fun in the sun.  But, did you know it also brings with it unique tax considerations? We have included a list of summer tax considerations below.

Vacation Home Rentals

Renting out vacation homes is a popular means of increasing income, but there are some significant tax implications to the practice, so it is best to be well-informed about laws regarding such rentals before becoming a temporary landlord. There are several variables to be considered, including length of rental time and whether the property is being used as a home, in order to determine tax responsibilities and allowable deductions. When using the property as a home and renting it out for fewer than 15 days annually, rental income does not have to be reported.  While qualified rental expenses can be deducted, if the property is being used as a home such deductions are limited to an amount not exceeding the rent received. 

College Tax Credits

It is important for families in which a member is heading off to, or back to, college, to be informed about education tax credits. For an eligible student, the American Opportunity Tax Credit (AOTC) may be up to $2500 per year for the first four years of higher education.  Since 40 percent of the AOTC is refundable, the taxpayer may be able to retrieve up to $1000 of the credit as a refund, whether or not the individual owes any taxes. 

The Lifetime Learning Credit (LLC) may enable the client to claim up to $2000 on his or her federal tax return, and the number of years this credit can be claimed is unlimited for an eligible student. Although only one type of education credit can be claimed per student per year, taxpayers may claim an AOTC for one student in the family and an LLC for another.  Expenses such as tuition fees may be included in assessing the tax credit. Most frequently, taxpayers are provided with a Form 1098-T -- Tuition Statement from the college or university to be used to report qualified expenses to the IRS.

Tax related matters are often confusing.  The experienced tax attorneys at the Arkansas firm of Hyden, Miron & Foster, PLLC, can help.  Contact us for a consultation by calling (501) 482-1787 or (888) 770-1848.


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