For those who pay for their education, some tax credits can help to reduce the amount due. For those responsible for education expenses, such as tuition, fees, textbooks, supplies and equipment, the American Opportunity Credit and the Lifetime Learning Credit are available. Some expenses incurred, such as insurance, transport and personal charges, are not eligible for either tax credit.
American Opportunity Credit:
Taxpayers can receive a dollar benefit of up to $ 2,500 per student who meets the criteria for qualifying. To be eligible, the student must be enrolled at least half a year throughout the tax year for a minimum of one academic semester. The student must also study to obtain a degree or certain certifications. The taxpayer claiming the credit can not have a criminal record including a felony drug conviction, otherwise the credit is not eligible. The American Opportunity Credit enables even those who do not owe taxes to be reimbursed up to $ 1,000, as 40 percent of the credit is reimbursed.
Lifetime Learning Credit:
Every eligible student can receive a Lifetime Learning Credit of up to $ 2,000 every year. Unlike the American Opportunity Credit, these benefits are not limited by graduation or student status, which means that part – time graduates can still benefit from this credit. However, all taxpayers claiming the credit for lifelong learning must have paid taxes for the year. There is no reimbursable part of the loan for those who have not owed tax. Unlike the previous loan, taxpayers with drug offenses may also claim this loan. These tax breaks are not available to taxpayers who pay through grants, fellowships or scholarships for educational expenses. Both credits have income restrictions, and the person claiming either credit can not be listed as a dependent on the tax return of anyone else. Further education can be expensive, but thankfully these tax breaks can help make your pocket tax time a little easier.