If you, your spouse, or one of your dependents is heading off to college this fall, you may be able to claim some education expenses on your tax return in the form of college tax credits. Here’s what you need to know:
- You can claim only one type of education credit per student on your tax return each year. If you have multiple eligible students, you could claim a different credit for each student.
- To qualify, education expenses must be for tuition, fees, and “related expenses” for an eligible student. Expenses must be paid for attendance at eligible higher education institutions, including most colleges and universities. Ask the school whether they are an eligible institution or check the school’s accreditation status in the U.S. Department of Education‘s Accreditation Database.
- The American Opportunity Tax Credit: The AOTC is worth up to $2,500 per year, per eligible student. You may claim this credit only for the first four years of higher education. 40% of the AOTC is refundable, which means if you are eligible, you can get up to $1,000 of the credit as a refund, even if you do not owe any taxes.
- The Lifetime Learning Credit: The LLC is worth up to $2,000 on your tax return. There is no limit on the number of years that you can claim the LLC for an eligible student.
Tip courtesy of IRS.gov