Updated: Apr 12, 2020
Tuition for college / university is expensive. Use these available tax credits and deductions to help offset the cost.
The American Opportunity Tax Credit
The American Opportunity Tax Credit is for students perusing their undergraduate degree.
For your 2019 taxes, the American Opportunity Credit:
Can be claimed in amounts up to $2,500 per student, calculated as 100% of the first $2,000 in college costs and 25% of the next $2,000.
May be used toward required course materials (books, supplies and equipment) as well as tuition and fees.
May be applied against four years of higher education
The income limits for the American Opportunity Credit for 2019 are:
Adjusted gross income (AGI) of up to $80,000 for single taxpayers and $160,000 for married taxpayers filing jointly.
The credit is gradually reduced at higher income levels. Lower-income taxpayers also benefit because up to 40% of the credit (or $1,000) is refundable, meaning that you can expect a check from the government if you owe no taxes.
A few things should be noted:
If you paid the tuition through a student loan, you are still eligible to take the credit
School must be accredited. You will be sent a 1098-T form from the school
Parents can claim this credit for their children who are listed as a dependent
The Lifetime Learning Credit
The maximum annual credit is $2,000, calculated as 20% of the first $10,000 in qualifying educational expenses.
The good news: unlike the American Opportunity Credit - there is no limit on the number of years of higher education for which you can claim it.
This is a great option for students taking courses towards a post undergraduate degree, or just taking courses for continuing education.
Like the American Opportunity credit, you must have a 1098-T form from an accredited school to take the credit.
The income limits for taking the Lifetime Learning Credit for 2019 are:
$58,000 for single filers and $116,000 for those filing a married filing jointly return.
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By: Christopher Keleshyan MBA, EA