Scroll down for these topics:
- EITC and ACTC Relief: Temporary Special Rule for Determination of Earned Income
- Coronavirus Updates
- Tax-Free CARES Grant for Higher Education
- Life Events and Tax Benefits for Educaiton
- Find out About Your Due Diligence Requirements
- Connect Your Social Network to Increase Awareness of the EITC, the CTC/ACTC/ODC and the AOTC
- IRS Outreach Connection on irs.gov
- Educational Opportunities
- Guide for Everything EITC for Individuals Online
EITC and ACTC Relief: Temporary Special Rule for Determination of Earned Income
Under the Taxpayer Certainty and Disaster Tax Relief Act of 2020, your client may elect to use their 2019 earned income to figure their 2020 EITC or ACTC or both if their 2019 earned income is more than their 2020 earned income. For details, see the instructions for Form 1040.
The IRS has established a special section focused on steps to help taxpayers, businesses and other affected by the coronavirus on IRS.gov.
Tax-Free CARES Grant for Higher Education under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act)
There’s good news if you received an emergency financial aid grant from your school because you were financially impacted by the coronavirus (COVID-19) pandemic.
The grant is tax-free to you! Do not include it in income on your 2020 tax return. Since the grant is tax-free, grant funds you use to pay for educational expenses cannot be used to claim the American opportunity tax credit, lifetime learning credit or the tuition and fees deduction on your tax return.
For more information on this topic, please see FAQs: Higher Education Emergency Relief Fund and Emergency Financial Aid Grants under the CARES Act or Publication 970, Tax Benefits for Education .
Life Events and Tax Benefits for Education
Has a life event caused a disruption in your post-secondary education pursuits? Are you taking more of your courses on-line instead of in-person? Are you delaying your educational goals?
Don’t forget to consider claiming the American opportunity tax credit (AOTC) even when life events happen and when you restart your education. Tax credits for education such as the AOTC can still help you pay qualified education expenses for an eligible student even if there’s a pause in educational goals, or courses were taken on-line. AOTC may reduce your tax up to $2,500 per eligible student and up to $1,000 may be refunded to you even if you’re not required to file a tax return.
A student can only be claimed for AOTC for four tax years. However, the years don’t have to be consecutive and courses can be taken on-line.
To be eligible for AOTC, the student must:
- Be pursuing a degree or other recognized education credential
- Be enrolled at least half time for at least one academic period* beginning in the tax year
- Not have finished the first four years of higher education at the beginning of the tax year
- Not have claimed the AOTC or the former Hope credit for more than four tax years
- Not have a felony drug conviction at the end of the tax year
*Academic Period can be semesters, trimesters, quarters or any other period of study such as a summer school session. The schools determine the academic periods. For schools that use clock or credit hours and do not have academic terms, the payment period may be treated as an academic period.
If you don’t qualify for AOTC, there are other education benefits to consider such as the Lifetime Learning Credit and the Tuition and Fees Deduction. See Publication 970 ,Tax Benefits for Education , for more information on these and other education tax benefits.
Find out About Your Preparer Due Diligence Requirements
Paid preparers who complete returns claiming the earned income tax credit (EITC), the child tax credit (CTC) refundable portion of the CTC, the additional child tax credit (ACTC), the credit for other dependents (ODC), the American opportunity tax credit (AOTC) and/or the head of household (HOH) filing status must meet due diligence requirements. For more information see Preparer Due Diligence Law.
Connect Your Social Network to Increase Awareness of the EITC, the CTC/ACTC/ODC and the AOTC
Visit our social network page for grab-and-go social media tools including EITC tweets, banner ads, Facebook ads, podcasts and more.
IRS Outreach Connection on IRS.gov
The IRS Outreach Connection offers you electronic communication materials to use in reaching out to the people you serve. Get free news you can use each month, targeted by time of year to coincide with what your customers, employees, volunteers, etc. need to know about new tax law legislation, IRS events and other activities that affect them. You can use these items on your websites, in electronic products, publications, etc. as needed. Visit the IRS Outreach Connection on IRS.gov.
Find out about eligibility rules for refundable tax credits, updates to tax law and regulations, return preparer due diligence requirements and more.
If you missed the nationwide tax forums, you can still audit or take the seminars on line for continuing education credit.
Guide to Everything Earned Income Tax Credit for Individuals Online
Post a link to, or download this electronic guide for finding EITC information on line. Pub 4935, Guide to Everything Earned Income Tax Credit for Individuals Online , helps you find the information you need to determine eligibility for EITC and how to file accurate EITC claims. This publication describes a topic briefly and then provides a link to an on-line resource for more information. We also have an electronic guide for return preparers. Find the guide, Pub 4933, Tax Preparers Guide to Everything Earned Income Tax Credit Online here.