James D. Lynch
Tax Credits To Help Offset Higher Education Costs
If taxpayers, their spouses, or their dependents take post-high school coursework, they may be eligible for a tax benefit. There are two credits available to help taxpayers offset the costs of higher education: the American Opportunity Credit and the Lifetime Learning Credit. Taxpayers use Form 8863, Education Credits, to claim the credits, and you will receive a Form 1098-T from the educational institution.
The American Opportunity 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 (meaning if the credit brings the amount of tax owed below 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