Education Credits 1. What is a Tax Credit Credits are designed to offset tax liability Refundable...
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Transcript of Education Credits 1. What is a Tax Credit Credits are designed to offset tax liability Refundable...
Education Credits
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What is a Tax Credit• Credits are designed to offset tax liability• Refundable credits• Nonrefundable credits• American Opportunity is refundable up to $1,000• Lifetime Learning Credit is nonrefundable
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American Opportunity Credit
• Eligible expenses:o Tuition and fees required to enrollo Books, supplies, and equipment required by school or courses
• Expenses that are not eligible:o Room and Boardo Travelo Parkingo Expenses that are not required to enroll/attendo Tuition and fees covered by a grant or scholarship
• $2,500 limit, $1,000 max refundable amount per student
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American Opportunity Credit
• For undergrads, 2 year programs, or other recognized educational credentialo Must be pursuing a degree
• Only available for 4 years• Student must be enrolled at least half time • Student cannot have a felony drug conviction• Cannot claim credit, if a dependent• MFS cannot claim education credits• Must be a US citizen or resident
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Lifetime Learning Credit
• Eligible expenses:o Tuition and fees required to enrollo Books, supplies, and equipment required by school and purchased from
the educational institution
• Expenses that are not eligible:o Room and Boardo Travelo Parkingo Expenses that are not required to enroll/attendo Expenses that are reimbursed by your job, scholarships, or grants
• $2,000 limit per tax return
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Lifetime Learning Credit
• Available for all years of post secondary education
• Taking classes or courses to improve job skillso Student does not need to be pursuing a degree
• Cannot claim if MFS filing status• Cannot claim if you are a dependent
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TaxWiseForm 8863
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• Enter qualified expenses under the correct credit and it will transfer to the 1040
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