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Two Tax Credits for Higher Education Costs

If you, your spouse or your dependent were enrolled in higher education classes during the 2013 tax year, you may be able to claim the American Opportunity Credit or the Lifetime Learning Credit to help defray a portion of the costs. Here is a summary of these two available tax credits for tax year 2013.

The American Opportunity Credit is:

  • Worth up to $2,500 per eligible student.
  • Only available for the first four years at an eligible college or vocational school.
  • Subtracted from your taxes but can also give you a refund of up to $1,000 if it’s more than your taxes.
  • For students earning a degree or other recognized credential.
  • For students going to school at least half-time for at least one academic period that started during the tax year.
  • For the cost of tuition, books and required fees and supplies.

The Lifetime Learning Credit is:

  • Limited to $2,000 per tax return, per year, no matter how many students qualify.
  • For all years of higher education, including classes for learning or improving job skills.
  • Limited to the amount of your taxes.
  • For the cost of tuition and required fees, plus books, supplies and equipment you must buy from the school.

For both credits:

  • Your school should give you a Form 1098-T, Tuition Statement, showing expenses for the year. Make sure it’s correct.
  • You must file Form 8863, Education Credits, to claim these credits on your tax return.
  • You can’t claim either credit if someone else claims you as a dependent.
  • You can’t claim both credits for the same student or for the same expense, in the same year.
  • The credits are subject to income limits that could reduce the amount you can claim on your return.

IRS Resources for Additional Information on Education Tax Credits:

Should you need help in the preparation of your income tax return to claim one of these tax credits or for any other reason, an appointment may be made with one of our Directors of Audit and Tax Services by reference to the CONTACTS page above.  Standard rates and terms for service will apply.

DISCLAIMER: This information is extracted with permission from IRS regulations and publications.  It is general in nature and the specifics of each taxpayer’s circumstances are different.  In addition, these rules may be subject to change from year to year depending upon new tax legislation and reform, as well as IRS interpretation of new and existing laws.  We therefore are not responsible for the application of this general information to the specific circumstances of a reader unless we have been engaged as the reader’s tax preparer or consultant.

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