Education Back-to-School: Education Tax Benefits to Offset Education Costs Read the Article Open Share Drawer Share this:Click to share on Facebook (Opens in new window)Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Pinterest (Opens in new window)Click to print (Opens in new window) Written by Jim Wang Published Aug 24, 2021 - [Updated Aug 8, 2024] 3 min read College is expensive. With student loans rivaling mortgages, it’s easy to see why it’s a big subject of discussion. Tuition, fees, books, housing, food, and the overall costs of attending universities are on the rise. If you are looking for a way to offset some of your education costs, the government offers some tax credits designed to help students and their parents. While these tax breaks won’t completely cover the cost of college, they can reduce some of the financial burden involved. American Opportunity Tax Credit The American Opportunity Tax Credit (AOTC) is offered to students who pay for tuition costs and aren’t claimed as dependents elsewhere or to parents who pay for their own or their dependent’s educational expenses. The American Opportunity Credit allows you to claim the credit for the first four years of college on qualified expenses at an eligible institutions. In order to take advantage of this credit, you must be pursuing a degree and be enrolled at least half time for at least one academic period per year. If you qualify, this tax credit allows you to claim up to $2,500 per eligible student. The amount of the credit is calculated using 100 percent of the first $2,000 of qualified education expenses for each eligible student and 25 percent of the next $2,000 of qualified education expenses you paid for that student. The full credit is available for individuals with a MAGI (Modified Adjusted Gross Income) of $80,000 or less ($160,000 if married filing jointly). If your MAGI is over $80,000 but less than $90,000 (over $160,000 but less than $180,000 for married filing jointly), your credit is phased out. This means that you will receive a reduced amount of the credit. Lastly, this credit is also 40% refundable, which means that you can get up to $1,000 back even if you don’t have a tax liability. Lifetime Learning Credit If you are looking for a tax credit for education costs beyond the first four years of college, the Lifetime Learning Credit (LLC) may be able to offset your expenses even if you are enrolled in graduate or professional school. Similar to the AOTC, this credit is offered to students who are not claimed as dependents elsewhere or to parents who cover their own or their dependent’s educational expenses. In order to take this credit, you must be taking courses in order to complete a degree, educational credential, or to get or further improve job skills. As with the AOTC, the educational institution must also be an eligible institution. With this credit, you can qualify for a credit of up to $2,000 per return for your expenses. The credit is calculated on 20% of your tuition and fees up to the first $10,000. This credit is not refundable. As with the AOTC, there is a phase out as you reach certain income levels. If your MAGI is between $80,000 and $90,000 ($160,000 and $180,000 if you file married filing jointly) for tax year 2024, then the credit will be phased out. You can’t claim the credit if your MAGI is $90,000 or more (or $180,000 or more if married filing jointly). Limitations to These Tax Breaks Realize that there are limitations to the tax breaks you can take. You can’t claim the American Opportunity and Lifetime Learning credits for the same student in the same year. If you are a parent with multiple dependent students, you can spread these credits around a little bit to maximize your refund. No matter what moves you made last year, TurboTax will make them count on your taxes. Whether you want to do your taxes yourself or have a TurboTax expert file for you, we’ll make sure you get every dollar you deserve and your biggest possible refund – guaranteed. Previous Post Charity Tax Deductions (What Counts as a Contribution?) Next Post How to Get Health Insurance as an Independent Contractor Written by Jim Wang More from Jim Wang 12 responses to “Back-to-School: Education Tax Benefits to Offset Education Costs” If I am a independent student, because I have a child do I have to claim my child on my taxes because of the I dependent status..does that effect my Loans or Pell Grant that I receive.. my child’s father wants to claim her on his taxes is the reason why I am asking this question Reply I’m trying to decide if it would be more beneficial to pay for this spring semester tuition before or after December 31 to be applied toward the 2018 tax year or pay it in January to be applied toward the 2019 tax year. I was enrolled in the fall semester. I am enrolled in a masters program. Each semester is about $12,000. Reply I’m a full time student Married how much total amount of my tuition can I claim I paid already 10,000$ Reply If I’m not employed right now can i file taxes and this is my first time filing, what type of form do I use? Reply If my student loans were only used for part of my tuition and I paid for the remainder myself, my 1098-T form does not cover that. Should I add the remainder of the tuition under “books and materials”? Or should I fill out a 8863 form to get credit for it? Do I need/Should I include this additional amount anywhere in my taxes (its about $900)? Thank you! Reply Can you claim college tuition and fees up to april deadline Reply Hi Glenn, You can claim education expenses you paid in 2014 on your 2014 taxes up to the deadline or when you file. Thank you, Lisa Greene-Lewis Reply Is the $9600 in room and board we’ve paid to the university considered part of tuition and fees? Reply Hi, No Room and Board does not count for education tax benefits. Thank you, Lisa Greene-Lewis Reply My daughter attends high school tuitition 7,778.88 per year plus 300 informs plus 200.00 books plus cash donations of 450.00. Can I claim this information. thx. irene Reply My husband is paying for his daughters college. She lives with her mother. Can we still claim the college tuition & expenses on OUR income tax return? Reply This is awesome I love turbo tax Reply Leave a ReplyCancel reply Browse Related Articles Education Education Tax Deductions and Credits to Maximize Your T… Tax News IRS Update for Form 8863: Education Tax Credits Taxes 101 The American Opportunity Tax Credit: Benefits for Stude… Education Tax Considerations for College Students Tax Tips Tax Breaks For College Students and Their Parents Education Is This Deductible? 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If I am a independent student, because I have a child do I have to claim my child on my taxes because of the I dependent status..does that effect my Loans or Pell Grant that I receive.. my child’s father wants to claim her on his taxes is the reason why I am asking this question Reply
I’m trying to decide if it would be more beneficial to pay for this spring semester tuition before or after December 31 to be applied toward the 2018 tax year or pay it in January to be applied toward the 2019 tax year. I was enrolled in the fall semester. I am enrolled in a masters program. Each semester is about $12,000. Reply
I’m a full time student Married how much total amount of my tuition can I claim I paid already 10,000$ Reply
If I’m not employed right now can i file taxes and this is my first time filing, what type of form do I use? Reply
If my student loans were only used for part of my tuition and I paid for the remainder myself, my 1098-T form does not cover that. Should I add the remainder of the tuition under “books and materials”? Or should I fill out a 8863 form to get credit for it? Do I need/Should I include this additional amount anywhere in my taxes (its about $900)? Thank you! Reply
Hi Glenn, You can claim education expenses you paid in 2014 on your 2014 taxes up to the deadline or when you file. Thank you, Lisa Greene-Lewis Reply
Is the $9600 in room and board we’ve paid to the university considered part of tuition and fees? Reply
My daughter attends high school tuitition 7,778.88 per year plus 300 informs plus 200.00 books plus cash donations of 450.00. Can I claim this information. thx. irene Reply
My husband is paying for his daughters college. She lives with her mother. Can we still claim the college tuition & expenses on OUR income tax return? Reply