Tag Archives: tax breaks

Oklahoma Senate takes up tax hike to halt week-long teachers’ strike

FILE PHOTO - Teachers pack the state Capitol rotunda to capacity, on the second day of a teacher walkout, to demand higher pay and more funding for education, in Oklahoma City, Oklahoma, U.S., April 3, 2018. REUTERS/Nick Oxford

By Lenzy Krehbiel-Burton

OKLAHOMA CITY (Reuters) – The Oklahoma Senate is set to debate a tax hike package on Friday to raise education funds in the hope of halting a week-long strike by its public school teachers, who are some of the lowest-paid educators in the country.

The strike that started on Monday has affected more than half a million students. It comes after a successful West Virginia strike last month ended with a pay raise and as teachers in other states angry over stagnating wages are considering walk-outs.

The Oklahoma package includes a $20 million internet sales approved by the House on Wednesday, a hotel tax hike expected to generate about another $50 million and a gambling measure that could bring in about another $22 million.

Tens of thousands of teachers have come to the state capitol this week seeking fresh spending for an education system that has seen inflation-adjusted general funding per student drop by 28.2 percent between 2008 and 2018, the biggest reduction of any state, according to the nonpartisan Center on Budget and Policy Priorities.

Last week, lawmakers approved the state’s first major tax increase in a quarter century, a $400 million revenue package that would have raised teacher pay by an average of about $6,000.

That was not enough for the teachers, seeking $10,000 over three years. Even with the pay raise already approved by lawmakers, they would still receive lower mean salaries than teachers in every neighboring state, U.S. Bureau of Labor Statistics data showed.

Republican-dominated Oklahoma has the lowest median pay among states for both elementary and secondary school teachers, according to 2017 data from the U.S. Bureau of Labor Statistics.

The minimum salary for a first year teacher was $31,600, state data showed.

Oklahoma has some of the lowest U.S. oil and gas production taxes and a major cause for the budget strain comes from tax breaks the state has granted to its energy industry, which were worth $470 million in fiscal year 2015 alone.

When energy prices plunged a few years ago and tax revenue dropped, Oklahoma lawmakers made deeper cuts to education funding, which was already on the decline.

As a consequence of low pay at home and better opportunities across state lines, Oklahoma is grappling with a teacher shortage that has forced some school districts to cut curricula, and go to a four-day school week.

(Reporting by Lenzy Krehbiel-Burton in Oklahoma City and Jon Herskovitz in Austin, Texas; Writing by Jon Herskovitz; Editing by Michael Perry)

Student tax breaks survive the tax bill, make the most of them

Graduates celebrate receiving a Masters in Business Administration from Columbia University during the year's commencement ceremony in New York in this May 18, 2005 file photo. dreams of many college seniors. REUTERS/Chip East/Files

By Gail MarksJarvis

CHICAGO (Reuters) – If you are going to college, getting extra training for a job, or paying off student loans, there are myriad tax breaks worth thousands of dollars to people burdened by college costs.

Although many were threatened in early versions of the tax bills crafted by the Senate and House and Representatives, students can breathe a sigh of relief that the benefits all remain. Tax experts suggest using these strategies before the end of December to get every penny possible:

* Student loan interest deduction

About 12.4 million borrowers make use of this deduction. You can deduct up to $2,500 in interest per year, which can result in tax savings that for some top $600.

The deduction depends on how much you have paid in a single tax year toward your student loans and also depends on your income.

If your loan payments made so far for 2017 do not qualify for the $2,500 maximum deduction and you are still paying off student loans, consider paying more before the end of the year to boost the deduction, said Mark Kantrowitz, publisher of www.Cappex.com. You can find out how much interest you have paid so far this year from the student loan servicer that collects your monthly payments.

To take the full $2,500 deduction, an individual cannot have a modified adjusted gross income over $65,000, and for couples $135,000. For individuals with incomes up to $80,000 and for married couples earning up to $165,000, smaller deductions apply.

Paying extra by Dec. 31 would be particularly wise if your income next year is likely to put you over the income cutoff, said Gil Charney, director of tax and policy analysis for The Tax Institute at H&R Block.

* College credits

Both the American Opportunity Credit and Lifetime Learning Credit provide tax breaks to help pay for education, but apply to different stages.

For undergrads, the American Opportunity Credit is worth up to $2,500 per year, but can be used only for the first four years of college. Students must attend at least half-time.

If you have not paid enough tuition and fees to qualify for the full credit this year and have been billed for the first quarter or semester in 2018, consider paying the bill now to maximize the 2017 credit, Charney said. The credit covers 100 percent of the first $2,000 in tuition and fees paid in a year; then 25 percent of the next $2,000.

Remember, there are income limits. You can’t get the full credit with modified adjusted gross income over $80,000; $160,000 for couples.

If your income will exceed the limit in 2018 but qualifies in 2017, this would be the year to capture as much as possible.

The same strategy applies to the Lifetime Learning Credit, which is valuable to part-time students, graduate students or workers trying to enhance job opportunities with an extra course or training.

The Lifetime Learning Credit is worth $2,000, or 20 percent of the first $10,000 spent in a year. So consider paying ahead for 2018 education, especially if you are near an income cutoff: over $56,000 in modified adjusted gross income for individuals, or $112,000 for couples for the maximum credit.

Keep in mind that if two spouses are going to school they cannot both claim the $2,000; it is a maximum per household. The American Opportunity Credit is kinder because it applies per student. Parents with three children in college at the same time could claim the credit for each child and do it annually for the four years a child is in an undergraduate program.

For more details, see IRS Publication 970

The opinions expressed here are those of the author, a columnist for Reuters.

(Editing by Beth Pinsker and Leslie Adler)