Understanding Education Tax Benefits and Incentives

For many parents it is has become very difficult to save for or pay for your child’s college education. Recognizing this, the federal government has stepped up its efforts to provide education tax benefits and incentives. While that is a good thing, understanding the myriad of education tax benefits and incentives out there can be frustrating and confusing to the average person. Lately, it seems every time you turn around there is some additional tax legislation in the area of education. Let’s review the various tax benefits and incentives available.

Hope Credit (American Opportunity Tax Credit)
Provides a tax credit for calendar years 2009 and 2010 of up to $2,500 for undergraduates in school more than half time. It can be claimed for all four years of undergraduate study. The first $2,000 of tuition costs and related fees (not room and board, however) are entitled to a 100% credit, while the next $2,000 of tuition costs (not room and board, however) are entitled to a 25% credit. Once your tuition costs exceed $4,000, there is no more Opportunity credit available. The credit is partially refundable. This means if you have no tax liability you are still eligible for a refundable credit of up to $1,000. If you are married parents with income of more than $160,000 your credit is phased out. If you are single, the credit begins to phase out when income levels exceed $90,000. This credit may be claimed by taxpayers who are subject to the dreaded alternative minimum tax, which is a good thing. You must reduce eligible education costs if you are receiving a scholarship, Pell grant, employer-provided educational assistance (tuition reimbursement) or distributions from 529 Plans.

Lifetime Learning Credit
Provides a nonrefundable tax credit of up to $2,000 for undergraduate, graduate and other tuition-related costs incurred during the calendar year. The first $10,000 of tuition costs and related fees (not room and board, however) are eligible for a 20% credit. You cannot claim this credit if you are also claiming the Hope Tax Credit in the same year for the same college student (no double dipping). This credit phases out in 2009 when your income level exceeds $100,000 (marrieds) or $50,000 (singles). You must reduce eligible education costs if you are receiving a scholarship, Pell grant, employer-provided educational assistance (tuition reimbursement) or distributions from 529 Plans.

529 College Savings Plans
When you contribute to a 529 Plan you do so with after tax dollars (net pay). The main tax benefit of 529 Plans is that earnings and gains are tax-deferred and if you make distributions from a 529 Plan to pay for qualified education expenses, then the earnings and gains are never taxed. One of the big advantages of 529 plans is that qualified education expense includes tuition, room and board. This means that even if your child gets a full scholarship for tuition, you can tap your 529 Plan to pay for his or her room and board. This is a big advantage over the Hope and Lifetime credits. You can contribute up to $13,000 for each child. This is a gift tax restriction. Anyone can contribute to your child’s 529 plan. Are you reading this grandparents? Each plan has an owner (typically the parent or grandparent) and one beneficiary (typically your child or grandchild). There is a provision that allows an acceleration of up to five years worth of contributions, or up to $65,000 in one year. This is an exception to the $13,000 gift tax restriction. If you make this election, you must file a gift tax return in the year of the contribution, however, there is no gift tax due, under this exception. You must reduce eligible education costs if you are receiving a scholarship, Pell grant or employer-provided educational assistance (tuition reimbursement).

Coverdell IRAs
Allows a non-deductible contribution using after tax dollars (net pay). Distributions from a Coverdell IRA (aka Education IRAs) are not taxed if such distributions are made for qualified education expenses. Qualified education expenses include tuition, room and board. The main advantage of Coverdell IRAs is the flexibility. Distributions may be made for elementary school, high school and tutoring costs, in addition to college expenses. This tax benefit phases out in 2009 when your income level exceeds $220,000 (marrieds) or $110,000 (singles).

Education Deduction
For 2009, taxpayers may deduct up to $4,000 in tuition and fees expenses as an above-the-line deduction (i.e. deduction from gross income). This deduction is available even if you do not itemize. The deduction is phased out when your income level exceeds $130,000 (marrieds) or $65,000 (singles).

Student Loan Interest Deduction
Borrowers of federal and private education loans may deduct up to $2,500 in interest as an above-the-line deduction (i.e. deduction from gross income). This deduction is available even if you do not itemize. Available for undergraduate or post-graduate program loans. The deduction is phased out when your income level exceeds $150,000 (marrieds) or $75,000 (singles).

Roth IRA
Distributions of principal (not earnings/gains) from Roth IRA accounts, open for five years or more, can be used to fund all college costs without any tax consequences.

Traditional IRAs
Distributions made from Traditional IRAs by individuals under 59 1/2 are subject to income tax and a ten percent penalty, however, if the distributions are for college tuition and fees, then the ten percent penalty is waived.

Series I or EE Bonds
Earnings on Series I or EE bonds are exempt if the money from the bonds is used to pay college tuition and fees. The exemption from earning is phased out when your income level exceeds $134,900 (marrieds-2009) or $84,950 (singles-2009).

Home Equity Loans
Money borrowed from home equity lines of credit or home equity term loans may be used to pay for all college costs. Interest on these loans is tax deductible on debt up to $100,000, but only for regular income tax purposes (not deductible for alternative minimum tax purposes).

Pell Grants
Pell Grants are outright gifts for undergraduate tuition costs. These grants are available only when the applicant can establish a financial need (“Financial Need” means you are at or near the poverty level) . Grants are capped at $5,350 for 2009/2010.

Perkins Loans
Like the Pell Grant, the applicant must show a financial need to qualify. For undergraduate students, the maximum available under this program is $4,000 per year. For graduate students, the maximum available under this program in $6,000 per year. There is a ten year repayment term with a nine month grace period following graduation.

Subsidized Stafford Loans
Like the Pell Grants and the Perkins Loan programs, this is a financial needs-based program. The federal government pays interest while your child is in college or graduate school. There are maximum subsidized amounts that you may borrow each year of $3,500 (Freshman), $4,500 (Sophomore) and $5,500 (Junior/Senior). Undergraduate cumulative subsidized loan amounts are capped at $23,000 for dependent students and graduate cumulative subsidized loan amounts are capped at $65,000. You may borrow an additional $2,000 per year beyond the subsidized amounts, however, this $2,000 is unsubsidized (meaning interest is not paid by the federal government on these amounts). You are required to file a FAFSA application under the Stafford Loan program to determine eligibility.

Unsubsidized Stafford Loans
Interest on these loans is capitalized while the student is in school. There is a grace period for any payments on these loans that ends upon graduation. Interest rates are higher under the unsubsidized Stafford Loan program. You are required to file a FAFSA application under the Stafford Loan program to determine eligibility.

PLUS Loans
These are loans made by traditional lenders. These loans must be paid back even while the student is in school (no grace period) . Interest rates are significantly higher than under the Stafford Loan program. There are no earnings limits restricting your ability to borrow funds under the PLUS Loan program. The PLUS Loan is a federal student loan and therefore must be “certified” (approved) by the college’s or university’s financial aid office. If your college or university requires the FAFSA for all students, they will not certify a PLUS Loan (even though it’s a loan for the parents) without a FAFSA on file.

Employer-Provided Education Assistance (Tuition Reimbursement)
Reimbursements by employers for undergraduate or graduate school tuition and related fees are excluded from employee income (W-2) to the extent such reimbursements do not exceed $5,250 per year.

Continuing Education Units

Continuing education programs are courses, seminars, lectures and demonstrations offered throughout the year for many different licensed professionals. These programs are often measured, depending on hours of time spent with the subject, in units. Most commonly, you will see the programs advertised for registered and licensed practical nurses; however, continuing education is for all health care professionals to benefit. To continue one’s education in their career is ambitious and maintains a level of competency employers thrive to find in their employees.

One may ask; if these continuing education courses are designed to maintain a license, are non-licensed personnel such as certified nursing assists or home heath aides required to obtain them? This answer is not a straightforward one. Unfortunately, where certified nursing assistants and home health aides are concerned much of their job responsibility and requirements are set forth by their employer. Where registered and licensed practical nurses are required to submit proof of continuing education to the board of nursing in their state, certified nursing assistant and home health aides most commonly report to the public heath department of their state. There are some states that require certified nursing assistants and home health aides to obtain continuing education units and there are some states that do not but the employers in those states do require it. The bottom line is you must research your states requirement for maintaining your certification as well as question your employer as to what their expectations from you are.

Continuing education can sound boring, especially if you just finished your certified nursing program. The last thing you want to do is head back to a classroom. Most continuing education courses are not boring and offer a lot of information on current health care issues and technology. Continuing education courses are easy to find. Sometimes they find you while on the job. You can receive continuing education units for listening to a five minute in service on the newest blood glucose testing monitor. Some courses are even offered to help the health care professional find a release for stress and to assist with providing relaxation, as the health care profession can be a very stressful place to work in. Courses are usually offered Monday through Friday throughout the year. For those that still do not feel like sitting in a classroom or listening to someone talk, courses are offered online for convenience. You just have to make sure your online course is provided by an approved company.

Continuing education programs are worth the time. They provide an opportunity for growth in an area one has all ready chosen to be part of. Not only will the continuing education increase your expertise on a subject matter, it will impress

Getting Your Certified Nursing Assistant (“CNA”) License

CNA Training (Certified Nursing Assistant) programs are a critical element in assuring that people who enter this part of the healthcare field are successful. CNAs’ provide almost 80% of the one-to-one care that is received by individuals living in care facilities. As the population continues to age there is a greater need for CNAs’ who play an increasing vital role in the health of the elderly and chronically ill.

While the requirements to become a CNA differ in each state, all have strict guidelines that must be met before an individual can add the term “Certified, ” “Licensed, ” “Registered, ” or “State Approved” to their Nursing Assistant title. A Nursing Assistant cannot work in a nursing home or long term care facility until they have been certified, or approved, by the state.

Completion of a CNA Training (Certified Nursing Assistant) program can be done in as little as a few weeks or take several months. Contacting the department that handles CNA training in your state to get the requirements for becoming a CNA in is very important.

There are two phrases to the CNA Training Program that must be completed before an individual is allowed to take the certification examination.

The first phase of the CNA Training is conducted in a classroom setting. An individual must take certain classes which include medical terminology, First Aid, Fundamentals of Nursing, and other medical education courses. These prepare a person for working in the clinical environment safely and effectively.

Clinical experience is gained through work at a facility. States differ on the number of clinical hours that an individual must work. The hours can range from a few weeks to a month to attain the required hours of clinical training. Some facilities pay a person who is working on their clinical hours and then hire them when they have passed the certification examination.

After completing both the educational and clinical requirements to qualify for the examination an individual then requests testing through the Department of Nursing Aide Programs in their State. The test will consist of two parts. The first part of the examination is based on the educational components that have been learned and the second part is designed to prove that an individual has the necessary skills to perform the job.

Moving to a different state will require that the CNA submit a Request for Reciprocity which may require some additional education before it is approved. However, after the request has been approved the CNA will then receive the title for the state they have been to. In some states Certified Nursing Assistants are called Licensed Nursing Assistants.

Certified Nursing Aide Career Training

Primary care givers inside nursing homes are certified nursing aides. To properly be able to care for individuals employers require students to become certified. Vocational colleges provide students with career certification when they complete an educational program.

Career training can be earned in a variety of ways but the most effective and accepted means of education is through a vocational college. Students work through courses or a certification program that develops their ability to help patients complete daily activities they may need help with. Already working professionals can take a set number of courses or training hours to advance in the career and become certified. Students that qualify for this path usually have been trained on-the-job and may only need specific knowledge that is obtainable through courses. Students with no previous knowledge of the field complete a certificate program that trains them to become certified nursing aides or commonly referred to as CNA’s. Education specifically trains students to pass the certification exam in order to enter the career field certified.

A course program may vary in length but for students that have prior training it usually is short and focused. Technical skills usually make up the core training in programs like these. Most programs integrate legal and ethical procedures to teach students to comply with standard regulations. Skills learned may include:

  • Taking vital signs
  • Performing specified emergency practices
  • Aiding nurses with diagnostic testing

Practice with resident care provides students with these skills and more. Education allows already working aides to pass the certification exam and gain more responsibility in the workplace.

Career training for students just entering the field comes in the form of a certificate program. Students work through a pre-determined amount of course hours to prepare for the certification exam and their future career. Programs may require students to complete up to 260 hours of training. States have specific certification requirements so students should check with their state to guarantee they complete the correct amount of education. The main areas of the job are covered from assisting patients with feeding to supervising their mental states. Areas of education cover emergency care, home healthcare, safety, and anatomy. The job duties that these courses cover teach students to conduct all tasks that CNAs are expected to perform. Job duties include:

  • Collecting blood samples
  • Performing electrocardiograms
  • Conducting clinical procedures

The career has students working in variety of environments. Students can pursue jobs inside nursing homes, hospitals, and assisted living communities. With the continual increasing need for long-term care for the country’s elderly population students can expect an 18 percent increase in job availability over the next eight years. This prediction made by the Bureau of Labor Statistics shows students the importance of earning an education. Students that have formal training are at the top of the list for employment as most employers want to hire educated individuals.

The field is continually expanding, which is creating more possible career options for students that have a desire to work in health care. Students can gain career training to match their level of expertise by enrolling in an accredited vocational college that offers diverse educational programs. Full accreditation is provided by agencies like the National League for Nursing Accreditation Commission ( http://www.nlnac.org/ ) to quality education programs.

DISCLAIMER: Above is a GENERIC OUTLINE and may or may not depict precise methods, courses and/or focuses related to ANY ONE specific school(s) that may or may not be advertised at PETAP.org.

Copyright 2010 – All rights reserved by PETAP.org.

What is a Certified Trainer?

I recently ran into quite a bit of conflict surrounding the subject of certified horse trainers and although I did a short article pondering the reasons for the harsh feelings against the idea, I had a request to give better arguments to support my stance on the subject. I was not really intending on debating the issue, just wanted folks to stop and think a moment about what certified trainer means. Now I will do my best to explain more completely My interpretation of Certification.

I will start by admitting that I have a very biased opinion on the subject as I have only sought the training of two ‘Gurus,’ both related. So, what I say will only be based on what I have studied and observed from them. What I know permeates the Certified crowd, however, will be fairly common. With that in mind I will do my best to address the opposition that I learned about while trying to give advice, warning and encouragement to a young horse trainer upstart. What it seems to all boil down to is worth, money / greed, and perceived knowledge.

Knowledge by definition in Encarta Dictionary is about as complex as the matter at hand: 1) information in mind – a general awareness or possession of information, facts, ideas, truths or principles 2) specific information – a clear awareness or explicit information 3) all that can be known – all the information, facts truths, and principles learned throughout time 4) learning through experience or study – familiarity or understanding gained through experience or study 5) transmission of information – communication. Nevertheless, you can see in all definitions, knowledge is based on information learned, whether by experience or study and the communication of such. Nowhere is there mention of knowledge simply existing or appearing in a mind.

What this means is the amount of knowledge a person has is in direct correlation to the amount of study, application, and experience a person has had in any given field. So it would be fair to say that the individual that has spent 5yrs training one horse on their own would not have as much knowledge in horse training as an individual that has spent those same 5yrs studying and putting into practice on several different horses, the same proven techniques of a person who used them to successfully train hundreds of horses.

Let’s say those two people had decided, due to their own success in training, to become professionals, how might you tell them apart? No real way except by their word and of course their product. Let’s look at a third option, there was a third individual who not only study and applied proven techniques, but also went to the individual they felt had the most knowledge of the usage of these techniques and went through classes with this teacher. Upon completion, the individual by displaying a satisfactory understanding of the materials presented by the teacher, received ‘proof’ of completing this course in the form of a ‘title.’ This person also decides, due to their success in and out of the class, to train others. You, as a prospective client, now have reason to believe this third individual has sufficient knowledge to help you.

There is the argument that there are lots of trainers out there who do not ‘certify and are not certified,’ and are great at what they do. This is very true, however, it is not to say that these trainers did not learn what they know from another more accomplished trainer then they. Some would even bring up trainers centuries ago who would fit this bill. Yet, how do we learn about these trainers? Study. How do we know what these trainers had to say was ‘good?’ Application. There were no ‘certification programs’ then? Maybe not in those words as then words of a man had more value than they do today. You cannot even be safe with a handshake or hand written contract anymore. But, before I get way off topic I would like to point out the Spanish School of Riding. You had to be a very accomplished rider to get in and when you came out you would be the creme de la creme. If you told someone you went to this school, I guarantee you were well exalted. I could see a rider from that school either charging more for their services and being extremely picky about the students they took. After all, it was this type of selective-ness that got them into the school to begin with.

Which leads us to the hot topic of money, which like politics, makes poor dinner conversation. With the matter at hand, it is directly related to worth. What drives us to spend money is need and desire. We grumble about gas prices, but continue to pay as we need to get to work and as many live too far from their place of employment to walk or bicycle, and thus it is worth the price. Desire, however, is a personal preference and is solely based on an individual’s perception of worth.

Worth (noun) by definition in Encarta Dictionary: 1) value in money 2) amount equaling given value – the amount of something that can be bought for a particular sum of money or that will last for a particular length of time 3) moral or social value – the goodness, usefulness, or importance of something or somebody, irrespective of financial value or wealth 4) wealth – the wealth of a person, group organization, or other entity Worth (adjective): 1) equal to particular amount 2) important enough to justify something.

Outside of the trades that cater to horse owners, horses are a hobby and an expensive one at that. Show horses are at the top of the chart when it comes to ‘frivolous’ spending. Saddles for thousands of dollars, bridles for hundreds of dollars, special feeds and supplements, pampering and care every day done by paid grooms and workers not to mention all the expenses accrued with showing. Showing is not everyone’s idea of fun and some shun the amount of spending as they do not see the worth. However, they may see the worth in having a trail horse that is not only calm, but also responsive and willing. In fact, they may have had an accident and they find these attributes are not just worthy, they are necessary. They would put great worth in a trainer that could help them create this kind of horse for them and would look for the trainer that has a track record of success in that area. In that same mind, there are trainers that want to help people achieve these goals and instead of continually ‘fixing’ the horse they want to also teach the rider how to maintain their horse as well. In other words, pass their knowledge on to the horse owner which in turn empowers the owner and enables them to continue training their own horse.

Sound like greed to you? If you wanted to become the best in any chosen field of employment you ‘pay for your education.’ You can go about it many ways: 1) You can read, research, and in essence train yourself, 2) You can attend free seminars, community college classes, and workshops, 3) Pay for a Trade School, 3) Pay for State College or University, 4) Pay for Private College. When it is time to hit the pavement which education do you think will best prepare you for your career choice? Which path is your perspective employer most likely to be impressed with and why?

Some people have the luxury of taking their training skills and helping others whenever and however they like. They don’t need the money and don’t charge or want to protect their ‘non-pro’ status and can’t take money. Training for them is a hobby. Others are trying to pay the bills, enlarge their facilities and grow a business. There are a lot of expenses that go with any entrepreneurial venture. As with feed stores and horse shoers, many horse owners think, “Well, I pay them ‘x amount’ every time I see them, they must be rich.” Or, “They make a bunch off me, they have lots of clients, they could give me a deal and still be racking in the dough.” You have to understand most horses are a hobby and an expensive one at that. The feed store, trainer, shoer are providing a service and it is their business. There are business expenses such as web design, advertising, office equipment, liability insurance, health insurance, and possibly workman’s comp. There are physical expenses such as expansion, ground maintenance, human amenities, building maintenance, equipment maintenance, tack, equipment, possibly workers, as well as storage and purchasing of hay, bedding, and such. That is not even an exhaustive list as you consider there could be a flood, fire, or other disaster that insurance may not cover. That is the average trainer just running a business.

Let’s say this trainer is really good at what they do and now people want the trainer to teach them how to get the results. The trainer has some options. They can say, “No, these are my secrets, they are what keep me in business,” or they can say “Yes, but I will not have enough time to train as many horses so I will have to get picky about what horses I take in. Supply and demand. The supply of the training is going down and the demand is going up.

Now you add travel, clinic expenses, additional insurance, vehicle maintenance, and other travel costs when that trainer decides to add clinics to their calendar. Many clinicians do not do horse training as it is obviously impossible. “But I want so and so to train my horse, how much will it cost.” Now this trainer’s time is more valuable to them. It has to be worth it to them so they don’t become resentful for taking time away from their clinics to train the horse.

As a product becomes more in demand, you have two options: 1) humor everyone at a low price or 2) raise the price and get pickier. In horse training it goes something like this: New trainer on the block takes everything with 4 legs, works four times harder than others as the horses are tougher, have destructive behaviors and many times the clients are not as committed. After awhile, as word gets out of the quality of the work, more people use the trainer and slowly the quality of horse and owner gets better. The trainer is getting older and realizes there is more to life than being kicked in the head, bit in chest, and left with non paying owners. The price goes up and the trainer will not accept the worst of the horses into training or perhaps stops training and starts running clinics only.

So how does this translate to Certified trainers? Holding a certificate only shows what you have accomplished in ‘school.’ It does not make you a master of your trade. It is a strong advantage to those who do not come from a ‘horse training’ family or live in a ‘horse training’ community. It shows others your dedication and desire to be the best at what you do. You have to beat the pavement just like everyone else. It does not make you a success, it gets you going down the road in the right direction with an edge over some of the competition. If someone finds value in that, they will become a client.

Greed will always drive some people and I don’t deny it, however, to put a label on people who’s desire is to be the best through education in order to provide the best is simply wrong. True wisdom and knowledge is obtained through experience and application, yet you will find those with arrogance and conceit to hide what they don’t have. I believe you have to be fairly blind to not see the difference in trainers no matter where they received their ‘education.’ And worth is as individual as the people who own horses. So, it all boils down to what you as a horse owner would like for you and your horse and what a horse trainer feels is important to them to pass on to the client. Why then the fuss? If I choose to study under an individual in order to become proficient in the techniques I feel are best, why is that any different than any other who studies under another via book, video or lesson? There are many different kinds of boats that traverse the waters, they all have to float, but they get to their destination in different ways.