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Save Money with Education Tax Credits

Save Money with Education Tax Credits

Education Tax Credits

The beginning of school is a good time to learn about the tax credits.  These tax benefits can help offset qualifying education costs. So if you’re paying education costs for yourself, a spouse, or a dependent you may be eligible to save money with education tax credits.

The American Opportunity Tax Credit (AOTC) is:

  • Worth a maximum benefit up to $2,500 per eligible student
  • Only for the first four years at an eligible educational or vocational school
  • For students pursuing a degree or other recognized education credential
  • Partially refundable – you can potentially get up to $1000 back.

The Lifetime Learning Credit (LLC) is:

  • Worth up to $2000 per tax return, per year, no matter how many students qualify
  • Available for all years of post-secondary education and for courses to acquire or improve job skills.
  • Available for an unlimited number of tax years.

Most noteworthy, to claim the AOTC or LLC, use Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits).  Also if you claim the AOTC, the law requires you to include the school’s Employer Identification Number on the form.

In Addition:

  • You’re required to have Form 1098-T, Tuition Statement to be eligible for an educational benefit.  You receive this form from the school you attended.  There are exceptions for some students.
  • You may only claim qualifying expenses in the year paid.
  • You may use only qualified expenses paid to figure a tax credit.  These include tuition and fees and other related expenses.
  • Eligible schools are those that offer education beyond high school.  This includes most colleges and universities.
  • You can’t claim either credit if someone else claims you as a dependent.
  • You may need to reduce the amount of your credit based on the amount of income you receive.
  • You can’t claim both the AOTC and LLC for the same student or for the same expense in the same year.

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