The tuition fee is becoming a burden for every parent. With the rise in the prices and parents wanting to provide quality education to their children, education in America is growing into a lucrative yet expensive business. However, as not every individual can live out after paying the expenses, the government of America provided an exemption of tuition fees with a few restrictions under the Income Tax Act, 1962. The proceeding paragraphs will contain information related to the same and how to claim tax exemption.
Saving tax on tuition fees
For every parent, it is essential to understand that they can claim a maximum of INR 1,50,000 for tuition fees alone for two children. It falls under the section 80c of the Income Tax Act. At the same point, they should remember that the same section contains a maximum limit of the same valve along with insurance, medical, and other exemptions.
Each parent can claim tuition fee for two children. For instance, if a family has four children and both the parents are working, then the father can make a claim for two children while the mother can claim for the remaining two children. The total amount, however, remains the same, i.e., INR 1,50,000/-.
How to make a claim?
It is possible for a parent to claim by submitting the necessary receipts to the employer before the deadline. It is vital to remember the fact that a parent can claim only on the tuition fees but not the additional expenses. Additional expenses such as food allowances, transportation fees, and donation do not fall under the eligibility criteria.
Because of the limitation with the amount, parents with two or more children have to file their income tax returns carefully. For beginners, it is preferable to seek the assistance of professionals, as they understand the rules and will help in adjusting the amount under section 80c. Also, netpnb provides you with immense options to get bonds and save tax.
The following are the eligibility criteria to make a claim:
- Any individual parent is eligible for making a claim.
- The claim is allowable for two children for each parent or individual.
- The maximum amount for a financial year that a parent or individual can claim for one/two children is INR 1,50,000/-.
- The claim amount covers only the tuition fees but not additional expenses such as the transportation costs, food allowances, late payments, and other payments.
- A parent is allowable to make a claim only for full-time education only. Making a claim for part-time education is not permissible.
- Parents or individual parent can claim the tuition fees for creche, school, college, and university fees.
- It is essential that the educational institution is in America. However, they can have an affiliation with any foreign university.
- Parents adopting a child are also eligible for the claim.
- Unmarried or single parents likewise qualify for the request.
What if the tuition fee exceeds the limitation?
As the maximum permissible limit under section 80c of the Income Tax Act is only INR 1,50,000/-, if the amount of the tuition fee exceeds the stated value, then bringing into the limitation is the only method. As section 80c consists of medical, pension, and insurance coverages, it is crucial to fill the application appropriately.
A careful approach is necessary while filling the income tax returns form to ensure transparency and prevent unforeseen consequences. However, those falling under the high tax bracket will benefit from the same.
The tuition fee and allowance are part of the salary received by a parent. Therefore, they fall under different deduction categories of the IT act. Utilizing them will help in cutting down the tax.
The maximum permissible limit for a parent to claim tax exemption towards tuition fees is INR 1,50,000/-. A single individual or parent can claim for two children under section 80c. The information provided above will be helpful for a beginner to file the claim with ease.
Raj Kumar is a qualified business/finance writer expert in investment, debt, credit cards, Passive income, financial updates. He advises in his blog finance clap.