October 17, 2016 12:57 am
For most taxpayers, this time of year marks the beginning of the return planning process—and with the school year in swing, there is no better time to explore eligibility for educational tax credits.
There are two educational credits available, according to the U.S. Internal Revenue Service (IRS): the American Opportunity Tax Credit and the Lifetime Learning Credit. Taxpayers can only claim one of these credits per student, per year, even if they are eligible for both.
The American Opportunity Tax Credit is available for “qualified education expenses,” such as tuition, up to $2,500 per student. Only taxpayers with a modified adjusted gross income (MAGI) of $80,000 or less (or $160,000 for married couples filing jointly) can claim the full credit.
The Lifetime Learning Credit is available for similar expenses, including tuition, up to $2,000 per return. Only taxpayers with a MAGI of $55,000 or less (or $111,000 for married couples filing jointly) can claim the full credit.
Both credits, which must be claimed through Form 8863, can be claimed by the taxpayer who pays qualifying expenses for an “eligible student,” which includes the taxpayer, spouse and dependents who are enrolled in an “eligible college, university or vocational school, according to the IRS.
Visit the Education Credits page on the IRS website, www.irs.gov/individuals/education-credits-aotc-llc, for more information, or to determine eligibility.
Source: U.S. Internal Revenue Service (IRS)
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