Save money at tax time if you, your spouse, or a dependent is heading off to college this fall! Did you know that some of the expenses for higher education can save you money come April 15? Here are 8 items you need to know before submitting your taxes if you, your spouse, or a dependent is headed off to college this fall:
1.American Opportunity Tax Credit . This credit applies for the first 4 years of higher education, and can be up to $2,500 for eligible students. Learn more about the American Opportunity Tax Credit here. 2.Lifetime Learning Credit . A student can claim the Lifetime Learning Credit for as long as they wish (unlike the American Opportunity Tax Credit). The LLC allows a credit of up to $2,000 on your federal return.3.One credit per student . You can only claim one type of education credit per student on your federal tax return each year. If a student is eligible for both the American Opportunity Tax Credit and the Lifetime Learning Credit, s/he can claim either, but not both. 4. Qualified expenses . Qualified expenses may include amounts you pay for tuition, fees and related expenses for an eligible student. To find additional information about qualified expenses, please click here. 5. Eligible educational institutions . To obtain any educational credit, the school must be eligible. Eligible institutions are those that offer education beyond high school, including most colleges and universities, and some vocational schools or other postsecondary schools.6. Form 1098-T . Most students receive Form 1098-T, Tuition Statement, from their schools. This form reports your qualified expenses to you, and the IRS. In some cases the form is different from the amount the student actually paid because of related costs like textbooks. A student still may be able to claim their textbook costs as part of the credit, but must remember that they can only claim an educational credit for the qualified expenses paid in the same tax year.7. Nonresident alien . You cannot claim an educational credit if you were a nonresident alien for any part of the tax year unless you elect to be treated as a resident alien for federal tax purposes.
For more information, click here. 8. Income limits . All credits are subject to income limitations and may be reduced or eliminated based on your income.
For more information, visit the Tax Benefits for Education Information Center on IRS.gov.
These free resources should not be taken as tax or legal advice. Content provided is intended as general information. Tax regulations and laws change and the impact of laws can vary. Consult a tax advisor, CPA or lawyer for guidance on your specific situation.