If your client, her spouse, or one of their dependents are attending college in the fall, the IRS has several back-to-school education tax credits available for families considering higher education. Aside from determining if the intended college or university qualifies as an eligible institution, there are several things to consider: families may only claim one credit per student; the amount of the credit is modified by the family's income; and the family should receive a Form 1098-T from the college by February 1, 2016, detailing their qualified expenses.
Yesterday's tax tip also included a number of credits:
• American Opportunity Tax Credit. The AOTC is worth up to $2,500 per year for an eligible student. You may claim this credit only for the first four years of higher education. Forty percent of the AOTC is refundable. That means if you are eligible, you can get up to $1,000 of the credit as a refund, even if you do not owe any taxes.
• Lifetime Learning Credit. The LLC is worth up to $2,000 on your tax return. There is no limit on the number of years that you can claim the LLC for an eligible student.
• Qualified expenses. You may use qualified expenses to figure your credit. These include the costs you pay for tuition, fees and other related expenses for an eligible student. Refer to IRS.gov for more on the rules that apply to each credit.
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Source: Internal Revenue Service