If you paid for college it can mean tax savings on your federal tax return. There are two education credits that can help you with the cost of higher education. These credits include the American Opportunity Credit and the Lifetime Learning Credit. Here are some important facts you should know about these education tax credits.
The American Opportunity Tax Credit allows you to claim up to $2,500 per eligible student. Some tips to consider under this tax credit:
- The credit only applies to the first four years at an eligible educational institution.
- 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 credentials.
- 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, required fees and supplies.
The Lifetime Learning Credit is limited to $2,000 per tax return, per year. Some tips to consider under this tax credit:
- This credit is available for an unlimited number of years as it applies to all years of higher education at an eligible educational institution. 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 cost of tuition, required fees, books, supplies and equipment.