With the summer ending and fall beginning, a lot of people are headed back to school. There are several tax benefits for education. If you or someone you know is in school, you definitely want to be aware of the two tax credits below.
The American Opportunity Tax Credit (AOTC) –
This credit is worth up to $2,500 for each eligible student, but it is only available for the first four years at an eligible school. This credit is for you students who are pursuing a degree and is partially refundable. You can get up to $1,000 of the credit as a refund, even if you do not owe any tax if you are an eligible student.
The Lifetime Learning Credit (LLC) –
This credit is worth up to $2,000 per tax return per year, no matter how many students qualify. It is available for all years of postsecondary education, and also for courses that improve/acquire job skills. It is also available for an unlimited number of tax years.
You should use the Education Credits Form 8863 to claim these education credits.
A few more tips about the two credits:
- You are required to have “Tuition Statement” Form 1098-T to be eligible for an education benefit, which you can get from the school you attend.
- You can only use qualified expenses, such as intuition fees and other related expenses, to figure a tax credit.
- A school is considered eligible are those that offer education beyond high school, which includes most colleges and universities.
- You can only claim your qualified expenses in the year that you paid for them.
- You cannot claim either credit if someone else claims you as a dependent.
- If your income is limited, it could reduce the amount of credits.
- You cannot claim both the AOTC or LLC for the same expenses.
