Start Saving Those College Receipts!

Start Saving Those College Receipts!

CAMPUS CroppedNow that school is back in session for the fall, it is a good time think about possible education credits.  It is important to compile receipts for qualified education expenses in order to potentially qualify for education credits.
There are two education credits available: the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). These credits may reduce the taxpayer’s income tax liability for qualified education expenses, such as tuition, fees and other expenses that are required for enrollment or attendance at an eligible post-secondary educational institution.  To see if an institution is a qualified institution, see the U.S. Federal Student Aid Code List.

 

With the American Opportunity Tax Credit, there is a potential credit of up to a $2,500 for qualified education expenses paid, with the first $2,000 of expenses at 100% and 25% of the next $2,000.  Forty percent of the credit is refundable, meaning that even if you paid $0 in taxes, you may still receive up to $1,000 from the IRS.

 

With the Lifetime Learning Credit, you may receive 20% credit for up to $10,000 in qualified education expenses.  That means a potential tax credit of up to $2,000.  With the Lifetime Learning Credit, in order for the educational expenses to qualify, payments must be paid directly to the institution.  The AOTC does not have this requirement.

 

Check out these other beneficial links:

IRS article to compare the education credits.

IRS app ‘Am I Eligible to Claim an Education Credit’ to determine your eligibility.

Education Credit FAQs on the IRS website.

Tax Benefits for Education IRS article article

Pub 970 – Tax Benefits for Education.

 

 

Colleen Minnich

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