Tax Benefits for Higher Education

There are two tax 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.

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.
  • For students enrolled at least half time for at least one academic period during 2016. Taxpayers can claim the AOC for a student enrolled in the first three months of 2017 as long as they paid qualified expenses in 2016.
  • Partially refundable. If the credit brings the amount of tax owed to zero,  40 percent of any remaining amount of the credit (up to $1,000) will be refunded.

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

The Tuiton and Fees Deduction is:

  • Worth a maximum benefit up to $4,000,
  • Claimed as an adjustment to income,
  • Available even if a taxpayer doesn’t itemize deductions on Schedule A,
  • Limited to tuition and certain related expenses required for enrollment or attendance at eligible postsecondary educational institutions.

For more information visit the IRS website at IRS-Tax Benefits for Higher Education

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