Education Tax Credits Help You Pay For College

Are you planning to pay for college in 2015? If so, there are two education credits that can help you with the cost of higher education. Taking advantage of these education tax credits can mean tax savings on your federal tax return by reducing the amount of tax you owe. Here are some important facts you should know about education tax credits.

American Opportunity Tax Credit:

• You may be able to claim up to $2,500 per eligible student.

• The credit applies to the first four years at an eligible college or vocational school.

• It reduces the amount of tax you owe. If the credit reduces your tax to less than zero, you may receive up to $1,000 as a refund.

• It is available for students earning a degree or other recognized credential.

• The credit applies to students going to school at least half-time for at least one academic period that started during the tax year.

• Costs that apply to the credit include the cost of tuition, books and required fees and supplies.

Lifetime Learning Credit:

• The credit is limited to $2,000 per tax return, per year.

• The credit applies to all years of higher education. This includes classes for learning or improving job skills.

• The credit is limited to the amount of your taxes.

• Costs that apply to the credit include the cost of tuition, required fees, books, supplies and equipment that you must buy from the school.

For both credits:

• The credits apply to an eligible student. Eligible students include you, your spouse or a dependent that you list on your tax return.

• You must file Form 1040A or Form 1040 and complete Form 8863, Education Credits, to claim these credits on your tax return.

• Your school should give you a Form 1098-T, Tuition Statement, showing expenses for the year. This form contains helpful information needed to complete Form 8863. The amounts shown in Boxes 1 and 2 of the form may be different than what you actually paid. For example, the form may not include the cost of books that qualify for the credit.

• 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.

• Use the Interactive Tax Assistant tool at IRS.gov to see if you’re eligible to claim these education tax credits.

If you can’t claim either of these tax credits, please connect with me on TaxConnections to see if there are other education-related tax benefits that you might be able to claim.

Dan has been preparing tax return for US Taxpayers and Expatriates since 1998 beginning with US military and Embassy mission personnel in Bangkok, Thailand. He has always loved math and took business accounting at City U. in Seattle Washington. Dan worked at Clint Gordon & Associates (Accredited Tax Consultant) were he gained his foundational knowledge of the US taxing system.

Dan has been studying tax preparation and tax law ever since increasing his skill and knowledge of the tax preparation business accordingly, Dan is known in many circles around the globe as an Expatriate Tax Expert. His book entitled “The Complete US Expat Tax Book” has recently been published and is available on Kindle, Amazon and booksellers around the world.

Thru the years, Dan has fought many battles with the Internal Revenue Service as well as various state taxing departments with great success in helping lower and or eliminate his clients tax debts.

Dan Gordon and his staff enjoy the work they do from the simplest 1040EZ to the most complex corporations, with the goal that no client should pay more tax than legally required.

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