Students and their parents could potentially qualify this year for three college education-related tax credits, according to the Internal Revenue Service.
The American Opportunity Tax Credit and lifetime learning credit as well as tuition and fees deduction are available for those who pay qualifying expenses for an eligible student, IRS Spokeswoman Dianne Besunder said.
Taxpayers may qualify for more than one of these benefits, but they can only claim one of them per student per year.
For those eligible, the American Opportunity Tax Credit yields the greatest tax savings.
The Lifetime Learning Credit is aimed more at part-time students and graduate school students.
Students who do not qualify for either of those credits should consider the tuition and fees deduction, Besunder said.
But all three benefits are available for students enrolled in an eligible college, university or vocational school, including nonprofit and not-for-profit institutions.
Typically, a student will receive a Form 1098-T from their college or university by the end of January.
The maximum annual amount for the American Opportunity Tax Credit is $2,500 per student. A student must be enrolled at least half-time, but a student who has already completed four years of college does not qualify.
Tuition, required enrollment fees and books qualify under the credit, but room and board do not.
The credit equals 100 percent of the first $2,000 spent and 25 percent of the next $2,000. The full $2,500 credit could be available to a taxpayer who pays $4,000 or more in expenses for an eligible student.
But the full credit is only available for taxpayers whose modified adjusted gross income is $80,000 or less. For married couples filing a joint return, the limit is $160,000.
An estimated 40 percent of the tax credit is refundable.
Graduate and undergraduate students can receive up to $2,000 per tax return through the Lifetime Learning Credit, which applies to each tax return rather than to each student.
The credit also equals 20 percent of the amount spent on eligible expenses. In other words, the full $2,000 credit is only available to those who pay $10,000 or more in qualifying tuition and fees.
The full credit can be claimed by those earning $52,000 or less or for married couples making $104,000 or less per year.
The tuition and fees deduction is available for all levels of post-secondary education. The annual deduction limit is $4,000 for joint filers earning $130,000 or less.
For more information on these credits, visit the IRS’s website.
