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Tax Credit
IRS Credits and Deductions
Several new tax benefits are available to help families meet the cost of post-secondary education. These tax benefits are intended to help students and their parents, as well as all working Americans, to fulfill a variety of educational objectives.
The American Opportunity Credit
The American Opportunity Tax Credit (AOTC) is a credit for qualified education expenses paid for an eligible student for the first four years of higher education. You can get a maximum annual credit of $2,500 per eligible student. If the credit brings the amount of tax you owe to zero, you can have 40 percent of any remaining amount of the credit (up to $1,000) refunded to you. Click here for more information https://www.irs.gov/credits-deductions/individuals/aotc
The Lifetime Learning Credit
This credit can help pay for undergraduate, graduate and professional degree courses – including courses to improve job skills – regardless of the number of years in the program.
For more information, see IRS Publication 970.
Tuition and fees deduction
Students and their parents may be able to deduct qualified college tuition and related expenses of up to $4,000. This deduction is an adjustment to income, which means the deduction will reduce the amount of your income subject to tax. The Tuition and Fees Deduction may be beneficial to you if you do not qualify for the American Opportunity or Lifetime Learning Credits.
You cannot claim any of the credits if you claim a tuition and fees deduction for the same student in the same year. To qualify for an education credit, you must pay post-secondary tuition and certain related expenses for yourself, your spouse or your dependent. The credit may be claimed by the parent or the student, but not by both. Students who are claimed as a dependent cannot claim the credit.
For more information, see Publication 970, Tax Benefits for Education, and Publication 520, Scholarships and Fellowships, are available from the IRS website or by calling 1-800-TAX-FORM. FORM (800-829-3676).
