Tax Tip 2018-117: Tax credits help offset higher education costs

 

IRS Tax Tips July 31, 2018

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Issue Number:    Tax Tip 2018-117 Tax credits help offset higher education costs Taxpayers who pay for higher education in 2018 can see tax savings when they file their tax returns. If taxpayers, their spouses or their dependents take post-high school coursework, they may be eligible for a tax benefit. There are two credits available to help taxpayers offset the costs of higher education. The American opportunity credit and the lifetime learning credit may reduce the amount of income tax owed. Taxpayers use Form 8863, Education Credits, to claim the credits. The American opportunity credit is: Worth a maximum benefit up to $2,500 per eligible student Only for the first four years at an eligible college or vocational school For students pursuing a degree or other recognized education credential Partially refundable. This means if the credit brings the amount of tax owed to zero, 40 percent of any remaining amount of the credit, up to $1,000, is refundable. The lifetime learning credit is: Worth a maximum benefit up to $2,000 per tax return, per year, no matter how many students qualify Available for all years of postsecondary education and for courses to acquire or improve job skills Available for an unlimited number of tax years To be eligible to claim the American opportunity credit, or the lifetime learning credit, the law requires a taxpayer or a dependent to have received a Form 1098-T from an eligible educational institution. More Information: Tax Benefits for Education: Information Center Education Credits – AOTC and LLC American Opportunity Tax Credit: Questions and Answers Pub 970, Tax Benefits for Education Share this tip on social media -- #IRSTaxTip: Tax credits help offset higher education costs. https://go.usa.gov/xUyYw Back to Top                     Thank you for subscribing to IRS Tax Tips, an IRS e-mail service. For more information on federal taxes please visit IRS.gov. This message was distributed automatically from the IRS Tax Tips mailing list. Please Do Not Reply To This Message.

 

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