Tax Breaks for College Tuition Using These IRS Tax Credit Options
If you are among the millions of people who are paying for higher education, there might be tax breaks for college tuition when you use the American Opportunity Credit or the Lifetime Learning Credit. You, your spouse, or dependent may be eligible for these tax benefits on post-high school coursework, not just traditional 4-year college.
Details of each tax credit are as follows:
The American Opportunity Credit
The maximum benefit is $2,500 per eligible student
You may only use it during the first four years at an eligible college or vocational school
Partially refundable, meaning if the credit brings the amount of tax owed to zero, 40% of any remaining amount of the credit, up to $1,000, is refundable.
The Lifetime Learning Credit
The maximum benefit is $2,000 per tax return, per year, for all students that qualify
You may use for all years of postsecondary education, as well as for any courses to acquire or improve job skills
Available for an unlimited number of tax years
In order to be eligible to claim either the American Opportunity Credit or the Lifetime Learning Credit, you or your dependent(s) must use Form 1098-T which is available from the eligible educational institution. Talk to the institution or your tax advisor if you have specific questions about these tax credits.