Tax Benefits for Education

Students are heading off to or back to college and it’s a good time for a reminder of the tax benefits for education. These benefits can help offset qualifying education costs. Here is information about two tax credits available to those who pay higher education costs for themselves, a spouse, or a dependent.

The American Opportunity Tax Credit (AOTC) is:

  • Worth a maximum benefit up to $2,500 per eligible student.
  • Only available for the first four years at an eligible educational or vocational school.
  • For students pursuing a degree or other recognized education credential.
  • Partially refundable. Eligible taxpayers can get up to $1,000 of the credit as a refund, even if they do not owe any tax.

The Lifetime Learning Credit (LLC) is:

  • Worth 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.

Taxpayers should use Form 8863, Education Credits, to claim these education credits.

Be sure to visit the IRS website for additional requirements and information. You can also see IRS Publication 970, Tax Benefits for Education, for details, rules, examples, and a complete explanation of benefits.

  • This information is not intended to be a substitute for specific individualized tax advice. We suggest you discuss your specific tax issues with a qualified tax advisor.

Tip courtesy of IRS.gov[i]

[i] https://www.irs.gov/newsroom/learn-about-tax-benefits-for-education