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*College is expensive, and the costs continue to rise. For the 2016–17 academic year, the average cost of in-state tuition, fees, and room and board at a public university is $20,090. At a private school, the average cost is more than double at $45,370.1

Fortunately, the federal government offers tax benefits that can help ease the financial strain. These tax provisions apply to tuition and fees required for enrollment or attendance, but not for room and board expenses. You cannot take more than one education tax benefit for the same expense or for the same student during a tax year.

Qualified expenses may be paid by the parents, the student, or even a third party. In order for parents to claim the expenses on their federal tax return, the student must be claimed as an eligible dependent. If the student is not claimed as an eligible dependent on anyone else’s return, the student may claim the expenses. A credit reduces your tax liability dollar for dollar, whereas a deduction only reduces your taxable income.

Education Credits and Deductions

 

American Opportunity Tax Credit — a maximum annual credit of $2,500 for each eligible student’s first four years of undergraduate education. It is calculated as 100% of the first $2,000 of qualified expenses plus up to 25% of the next $2,000 of such expenses. In addition to tuition and fees, the credit may be applied toward expenses for books, supplies, and equipment required for attendance. The student must be pursuing a degree and enrolled at least half-time for one academic period during the tax year. If the credit reduces tax liability to zero, up to 40% of the credit ($1,000) is refundable.

Lifetime Learning Credit — a nonrefundable credit limited to $2,000 per year (20% of the first $10,000 of qualified tuition and fees), per tax return, even if you have multiple students in the household. It applies to all years of post-secondary education, so the credit can be used for graduate school or for undergraduate education after the student uses all four years of the American Opportunity Tax Credit. It also applies to job-development courses even if the student is not pursuing a degree.

Tuition and Fees Deduction — an “above-the-line” tax deduction of up to $4,000 for qualified tuition and fees (scheduled to expire at the end of 2016 unless Congress takes action). The deduction is typically used for a student who is not eligible for an education tax credit.

Determining Qualified Expenses

If you paid tuition and fees during a tax year, you should receive Form 1098-T, Tuition Statement, by January 31 of the following year. Generally, you must reduce the amount of qualified expenses shown as paid or billed on the form by the amount of tax-free educational assistance, such as grants or scholarships. However, if scholarships or grants are reported as income on the student’s return and the funds may be used for nonqualified expenses (such as room and board), they do not have to be subtracted from qualified expenses on the parents’ return.

Education credits and deductions are subject to income limits (see chart). If you have questions about the appropriate treatment of educational expenses on your return, be sure to seek advice from a tax professional.

  • College Board, 2016

Happy Investing!

Scott C. Weaver

 

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. Copyright 2016 Emerald Connect, LLC.

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By Pat Toomey and Sherrod Brown

Pat Toomey sherrod Brown

 

Often, the image of opioid addiction in America today is that of a working-age adult who first turned to painkillers for relief from a back injury. Or it is the young person who was introduced to oxycodone as a party drug, and now, with pills having become too expensive, has turned to heroin.

Forgotten in the national conversation are the hundreds of thousands of senior citizens who are unwittingly being given duplicative and unsafe prescriptions of opioids and other controlled substances. These seniors face elevated risks for cognitive impairment, falls and fractures, and even overdose deaths. Between 1993 and 2012, inpatient hospital stays related to opioid overuse by Medicare beneficiaries rose more than ten percent annually.

While nearly one-third of all Medicare beneficiaries will receive at least one opioid prescription each year, finding those at highest risk for adverse outcomes from painkillers is fairly easy. The Medicare Payment Advisory Commission estimates that less than one percent of Medicare beneficiaries account for 70 percent of all spending on pain pills.

Opioids can help to quickly control intense pain, but long-term use is known to become less effective in many patients. In fact, seniors who are receiving the most opioids aren’t likely to be any healthier.

Medical specialty societies are developing new guidelines that reduce both the dosage and the length of time prescription opioids can safely be taken. For instance, the American Academy of Neurology recently found that the risks of opioids outweighed any benefits for treating headaches, lower back pain, and fibromyalgia.

Seniors with chronic pain and illnesses, who are visiting multiple specialists and physicians, can find it difficult to manage many prescriptions. Their physicians may be unaware they are prescribing duplicative opioid painkillers due to the fragmented nature of care. Adding to the problem, those prescriptions can then be filled at multiple pharmacies. To address this gap in treatment and deliver higher quality coordinated care to seniors, we introduced the bipartisan Stopping Medication Abuse and Protecting Seniors Act (S. 1913).

Recently passed by the Senate as an amendment to the Comprehensive Addition and Recovery Act, our proposal will ensure that the small number of seniors who receive high doses of addictive opioids, get those painkillers only from a single provider and a single pharmacy. The legislation not only helps individuals who are battling addiction get treatment, it also saves taxpayers nearly $100 million over the next decade by helping to reduce overprescribing and to stop outright fraud.

“Locking in” at-risk individuals to a single prescriber and pharmacy is not a new idea. Commercial insurance plans and Medicaid already successfully use it. States such as Iowa, Oklahoma, and Washington have all seen fewer emergency room visits, opioid prescriptions, and millions in savings from “lock-in” programs.

 

The Stopping Medication Abuse and Protecting Seniors Act will deliver better care to seniors, and help to reduce a significant source of pills for the narcotics black market. The nonpartisan Government Accountability Office has found there are more than 170,000 Medicare enrollees actively engaged in “doctor shopping” for physicians who will unknowingly write redundant opioid prescriptions. Some of these individuals are likely feeding their own addiction. Others are selling significant quantities of these powerful narcotics to criminal gangs and entities, providing fuel to the burning epidemic.

In the last two budget requests, the Administration has requested Congress grant it authority to initiate a “lock-in” program for Part D. The HHS Inspector General routinely recommends “lock-in,” and the House of Representatives has already passed similar legislation as part of its 21st Century Cures package.

Our bipartisan proposal, which has been endorsed by the Pew Charitable Trusts, Medicare Rights Center, Academy of Managed Care Pharmacy, and numerous law enforcement groups, should be part of any final legislative package addressing opioid abuse that goes to the president for his signature.

Ending the epidemic of opioid addiction will require a multi-faceted approach, and our proposal is one step we can take right now that will also help seniors get better coordinated care. While it is terrific that the Senate has passed this measure, we must continue working to ensure that this sensible, bipartisan effort to protect our nation’s senior citizens becomes the law of the land.

Sherrod Brown, a Democrat, is the senior United States Senator from Ohio. A Republican, Pat Toomey is the junior United States Senator for Pennsylvania.

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Democrat Katie McGinty, made it through to the general election,ending Joe Sestak’s hope of a rematch of the 2010 contest.

McGinty, who just two years ago placed last in the gubernatorial primary, received financial support and endorsements from organized labor, Democratic-aligned groups, and the party’s senatorial campaign arm, trounced former U.S. Rep. Sestak, the party’s U.S. Senate nominee in 2010, according to unofficial results with nearly 99 percent of Pennsylvania’s statewide precincts reporting.

Braddock Mayor John Fetterman, an outsider whose politics aligned with presidential hopeful Bernie Sanders, said he had an impressive showing considering “we’ve been outspent 15-to-1.” McGinty will face incumbent Republican U.S. Sen. Pat Toomey.

Sestak, who rebuffed Democratic Party leaders in 2010 and defeated the late U.S. Sen. Arlen Specter but then lost to Toomey, eschewed traditional support this time around.

In another heated primary, Democratic and Republican voters tapped politicians over prosecutors as their standard-bearers to replace Attorney General Kathleen Kane.

Montgomery County Commissioner Josh Shapiro defeated Allegheny County D.A. Stephen Zappala Jr. and Northampton County D.A. John Morganelli. Shapiro will face fellow Montgomery Countian, Sen. John Rafferty, who defeated former federal prosecutor Joe Peters, in November.

Shapiro and Rafferty, who did work for the Office of Attorney General from 1988 to 1991 primarily investigating and prosecuting Medicaid fraud, both pledged to clean up the Office of Attorney General following Kane’s turbulent tenure.

As expected, Democrat Hillary Clinton defeated Sanders by a wide, double-digit margin. Republican frontrunner Donald Trump ran away with the popular vote over U.S. Sen. Ted Cruz, R-Texas, and Ohio Gov. John Kasich.

For Trump, the popular vote secures 17 of Pennsylvania’s 71 GOP delegates. And of the other 54 unbound delegates that were up for election (three delegate slots available in each of the state’s 18 congressional districts), it appears at least half of those elected are backing Trump (maybe as many as 31).

Congress

State Rep. Dwight Evans of Philadelphia defeated long-time incumbent U.S. Rep. Chaka Fattah in a four-way primary race by more than 10,000 votes. The district, which covers Philadelphia and parts of Montgomery County, is predominantly Democratic.

In the 16th congressional district, state Sen. Lloyd Smucker defeated Chet Beiler in the Republican bid to replace U.S. Rep. Joe Pitts.

In the 8th congressional district, Republican U.S. Rep. Mike Fitzpatrick’s brother, Brian, won a three-way primary race. Rep. Fitzpatrick isn’t seeking re-election. He’ll face State Rep. Steve Santarsiero, who defeated Shaughnessy Naughton.

In the 9th district, U.S. Rep. Bill Shuster defeated Art Halverson.

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MedicalCannabis

After several impassioned appeals, the state House of Representatives gave its overwhelming approval to legislation establishing a system to produce and dispense medical marijuana for certain medical conditions on March 16.

The 149-43 vote sends the legislation back to the Senate. If changes are made in the Senate, it’s unclear when the House would take up the measure again.

Sen. Mike Folmer, R-Lebanon, the prime sponsor and a top legislative advocate for medical marijuana, said he was “very grateful” for the House lawmakers who supported the legislation. Now, he said the House amendments will be reviewed to make sure the legislation “works for patients.”

Senate Bill 3 would allow 50 dispensaries to have up to three separate locations, meaning potentially 150 places where patients could obtain medical marijuana after receiving a certification from a physician.

The legislation’s list of a “serious medical condition” includes cancer, epilepsy, autism, sickle cell anemia, intractable seizures, amyotrophic lateral sclerosis (ALS), Parkinson’s disease, multiple sclerosis, post-traumatic stress disorder, HIV/AIDS, glaucoma, severe chronic and intractable pain of neuropathic origin, inflammatory bowel disease, neuropathies and Huntington’s disease.

In one stirring plea, Rep. Jeff Pyle, R-Armstrong, spoke about his diagnosis with a hereditary form of cancer. After an operation and with nearly 50 staples in his stomach, he refused his friend’s offer of medical marijuana oil to help increase his appetite, he said. He said he refused to take it because he had to “live what I preached” as a state representative. The thought of the pain his daughters might have to suffer if they were struck with the inheritable disease drove him to support the legislation.

“I want them to have access to comfort that I did not have,” he said as his voice cracked.

Rep. Mike Regan, R-York, said he had “a moral obligation” to vote for the legislation, adding that “my faith tells me that this is the moral, compassionate, right thing to do.”

Much of the opposition to the legislation touched on caution from the medical community, fear of drug proliferation, and legal issues. Responding to the emotional pleas, Rep. Chris Dush, R-Jefferson, said “let’s connect the heart to the head and do this right.”

House Health Committee Chairman Matt Baker, R-Tioga, who has led the opposition in the House, said he found it “astounding” that the chamber was going to dismiss the opinions from the medical community, which supports more research.

“As the Health chairman, I think the combined professional opinions of the medical community should mean something,” Baker said. “Their opinions should not be marginalized…My goodness, we’re talking about medicine here.”

House GOP Whip Bryan Cutler, R-Lancaster, said he was concerned that approval of the bill would lead to confusion with federal enforcement agencies as well as potential conflicts with a variety of other state laws.

Rep. Jerry Knowles, R-Schuylkill, said he was concerned the legislation could lead to proliferation of drug use.

Under SB3, patients wouldn’t be allowed to smoke medical marijuana. Dispensaries could sell it as a pill, oil, topical form, or forms for a medically-approved administration of vaporization or nebulization, tincture and liquid. It could not be sold in edible form, but patients would be able to incorporate it into food to aid ingestion.

A 5-percent tax on growers and producers would help fund research at universities and hospitals, and be used to offset costs for patients who can’t afford medical marijuana. The Department of Health and an advisory board would oversee the program, including creating regions so patients would have access to the drug. The board would, among other tasks, determine whether to expand or reduce the number of dispensaries and the list of applicable medical conditions.

If approved, Pennsylvania will join 23 states and the District of Columbia in legalizing a medical marijuana program.