Tax credits reduce your taxes dollar for dollar, so they can take some of the bite out of your tax bill.
The credits are available for you, your spouse or claimed dependents. But you can’t take both credits for the same expenses or same student.
The American Opportunity Tax Credit:
• has a maximum credit of $2,500
• is available for all taxpayers but is subject to certain income limits which adjust annually
• is a credit for tuition, some types of fees and course materials
• applies to the first four years of post-secondary education expenses
• applies to the taxpayer, spouse or dependents
For more information and current income restrictions, check out the IRS FAQ page.
The Lifetime Learning Credit:
• has a maximum credit of $2,000.
• is available for taxpayers with modified adjusted gross incomes (MAGI) up to certain limits that change each year. It can be used for expenses such as tuition, certain fees & course supplies
Get more information on the IRS website.
To see if you are eligible for either credit, use the IRS education tax credit calculator tool.
To claim the credit you must complete Form 8863 & attach it to your tax return.
Visit the IRS website or talk with your tax preparer for more information. There are numerous rules about which educational institutions are eligible and how to calculate the credit.