)As a college student or the parent of a college student, you may qualify for Education Tax Credits that reduce the amount of taxes you’ll have to pay. Before you file your taxes, you should know the qualified deductions you can claim.
American Opportunity Credit
The American Opportunity Credit is a modification of the Hope credit for 2009 and 2010. This modification allows more taxpayers to advantage of the credit, including individuals who owe no taxes. Taxpayers may claim this credit for tuition and college course materials for up to four years, with a maximum yearly credit of $2,500.
Who Qualifies for the American Opportunity Credit?
If you are single and your modified adjusted gross income is less than $80,000 or less than $160,000 for married couples filing jointly, you may qualify for this credit. If you live in a Midwestern disaster area, special rules apply. If you think you may qualify for this credit, you can check out all the requirements on the Internal Revenue Service website.
Hope Credit
This credit is applicable to the tax years 2008 and earlier. If this credit reduces your taxes to zero, you will not be able to get a refund for the additional credit.
According to the Internal Revenue Service, you may qualify for the Hope credit if you meet these conditions:
“You pay qualified education expenses of higher education.”
“You pay the education expenses for an eligible student.”
“The eligible student is either yourself, your spouse or a dependent for whom you claim an exemption on your tax return.”
Lifetime Learning Credit
This credit is also for college students and parents of college students. The Lifetime Learning Credit has no limit on the number of years a student or parent can claim it; however, an individual cannot claim it. Like the other education credits, you can claim this credit for applicable college-related expenses.
What If there are two or More College Students in the Same Household?
If there is more than one qualified student in the household, you can claim credits for each student but you cannot claim the same credit twice. For instance, you may claim the Lifetime Learning Credit for one student and the American Opportunity Credit for another student.
Claim College Credits on IRS Form 8863
If you, your spouse, or your child is eligible for an Education Tax Credit, you can claim your credits on Form 8863.
Reduce Your Taxable Income by Claiming Tuition and Fees
If you do not qualify for the Lifetime Learning Credit, you may be able to claim up to $4,000 of tuition and applicable fees if you meet all three conditions:
“You pay qualified education expenses of higher education.”
“You pay the education expenses for an eligible student.”
“The eligible student is yourself, your spouse, or your dependent for whom you claim an exemption on your tax return.”
If you do not itemize your deductions, you can claim it on Form 8917, Tuition and Fees Deduction. Certain limitations apply so check out their site for more information.
Explore All Your Qualified Educational Deductions
If you’re a student, parent, or spouse of a qualified student, educate yourself on all the available Education Tax Credits and deductions at IRS.gov. You may be pleasantly surprised to learn how pursuing your education can reduce your overall tax liability.
