Parents and students can be eligible for tax benefits to help with the expense of higher education.
Who can claim an education credit? You must meet the following criteria:
Here's how the calculations work:
To be eligible for an AOTC, the student must:
In order for you to claim the full credit, your modified adjusted gross income must be $80,000 or less — $160,000 or less if you're married and filing jointly. You cannot claim the credit if your modified adjusted gross income is more than $90,000, or $180,000 for joint filers.
The Lifetime Learning Credit is for qualified tuition and related expenses paid for eligible students enrolled in eligible educational institutions. The credit can help pay for undergraduate, graduate or professional degree courses, including courses to acquire or improve job skills. It's worth up to $2,000 per tax return.
The amount of your LLC is gradually reduced if your modified adjusted gross income is between $57,000 and $67,000 — $114,000 and $134,000 if you file jointly. You can't claim the credit if your modified adjusted gross income is $67,000 or more, or $134,000 or more if you file joint returns.
The amount of the credit is 20% of the first $10,000 of qualified education expenses or a maximum of $2,000 per return. The LLC is not refundable. You can use the credit to pay any tax you owe, but you won't receive any of the credit back as a refund.
To claim the AOTC or the LLC, the law requires a taxpayer or dependent to have received Form 1098-T, Tuition Statement, from an eligible education institution, whether domestic or foreign.
Students receive a Form 1098-T from their school by Jan. 31. The statement helps you figure out your credit. The form's Box 1 shows the amounts received during the year. Make copies of all documents used to discover whether you qualify and to determine the amount of your credit.
Parents and students can learn more about education credits by checking IRS.gov and looking for education resources. There is an IRS Interactive Tax Assistant tool that can help you determine whether you're eligible for education credits or deductions.
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