As we all prepare for the start of another school year, there are opportunities for tax savings. If you, your spouse, or your dependents are heading back to school, you will want to check to see if you qualify for these tax credits.
American Opportunity Tax Credit (AOTC)
The AOTC is a tax credit of up to $2,500 per eligible student. You can claim this credit for the first four years of higher education. The AOTC is a ‘40% partially refundable credit’. That means that you can get $1,000 refund even if you do not owe any taxes.
Lifetime Learning Credit (LLC)
This credit is worth up to $2,000 and there is no limit on the number of years you can claim it for an eligible student.
Summary
These credits are available for ‘qualified expenses’ which include tuition, fees, and other expenses directly related to the education. You must attend an eligible school which includes most colleges and universities and many vocational schools. Most schools will give a form 1098-T that contains most of the information you will need to claim the credits.
You can only claim one of the credits per student and income limits apply.
You can get more information by calling our office, visiting the IRS website (www.IRS.gov search for Education Credits) or from IRS Publication 970.