With school back in session, parents and students should remember to look into tax credits that can help reduce the cost of higher education.
If you, your spouse or your dependents pay for higher education expenses in 2019 you may be eligible to take these tax credits when you file your tax return next year.
There are two credits available to help you offset the costs of higher education. The American opportunity tax credit and the lifetime learning credit may reduce the amount of income tax owed. You file the Form 8863, Education Credits, to claim the credits.
To be eligible to claim the American opportunity tax credit, or the lifetime learning credit, you or a dependent must have received a Form 1098-T from an eligible educational institution.
The American opportunity tax credit is:
- Worth a maximum benefit up to $2,500 per eligible student.
- Only for the first four years at an eligible college or vocational school.
- For students pursuing a degree or other recognized education credential.
- Partially refundable. This means if the credit brings the amount of tax owed to zero, 40 percent of any remaining amount of the credit, up to $1,000, is refundable.
The lifetime learning credit is:
- Worth a maximum benefit up to $2,000 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.
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