The beginning of the school year is a good time for a reminder of the tax
benefits for education. These benefits can help offset qualifying education
costs.
Here is information about two tax credits available to those who pay higher
education costs for themselves, a spouse or a dependent.
The American
Opportunity Tax Credit (AOTC) is:
- Worth a maximum benefit
up to $2,500 per eligible student.
- Only available for the
first four years at an eligible educational or vocational school.
- For students pursuing a
degree or other recognized education credential.
- Partially refundable.
Eligible taxpayers can get up to $1,000 of the credit as a refund, even if
they do not owe any tax.
The Lifetime Learning
Credit (LLC) is:
- Worth up to $2,000 per
tax return, per year, no matter how many students qualify.
- Available for all years
of postsecondary education and for courses to acquire or improve job
skills.
- Available for an
unlimited number of tax years
Taxpayers should use Form
8863, Education Credits, to claim these education credits.
Additionally:
- A student is required to
have Form 1098-T, Tuition Statement, to be eligible for an education
benefit. They receive this form from the school attended.
- Taxpayers may use only qualified
expenses paid to figure a tax credit. These include tuition and fees
and other related expenses for an eligible student.
- Eligible
educational schools are those that offer education beyond high school.
This includes most colleges and universities.
- Taxpayers may only claim
qualified expenses in the year paid.
- Taxpayers can’t claim
either credit if someone else claims them as a dependent.
- Income limits could
reduce the amount of credits.
- Taxpayers can’t claim
either the AOTC or LLC for the same student or for the same expense in the
same year.
- The Interactive
Tax Assistant tool on IRS.gov can help determine eligibility for
certain educational credits including the American Opportunity Credit and
the Lifetime Learning Credit.
See IRS Publication
970, Tax Benefits for Education, for details, rules, examples and a
complete explanation of benefits.
Avoid scams. The IRS does not initiate contact using social media or text
message. The first contact normally comes in the mail. Those wondering if they
owe money to the IRS can view
their tax account information on IRS.gov to find out.
Additional IRS
Resources: