Don’t Overlook Education Related Tax Benefits

As you (or your preparer) file your taxes, an important benefit that should not be overlooked are the college education credits. According to the IRS, taxpayers who pay qualifying expenses for a student can be eligible for the American opportunity tax credit, lifetime learning credit, or the tuition and fees deduction. Even though the taxpayer often qualifies for more than one of these benefits, only one can be claimed per student each year.       

The American opportunity tax credit has been extended until the end of 2017, thanks to the American Taxpayer Relief Act being enacted on January 2, 2013.

Students wondering which benefits will see the greatest refund, here are a few things the IRS says to consider when filing. Most undergraduate students will benefit from the American opportunity tax credit. Part-time or graduate students should consider the lifetime learning credit. If students do not qualify for either of those credits, the tuition and fees deduction is the best option. 

A student should receive a Form 1098-T from their institution that has tuition information from the previous academic year. Taxpayers should also be aware that amounts shown on this form might differ from the amounts that can be claimed for tax benefits. The IRS says to see the instructions on forms 8917 and 8863 and to also look at  Publication 970 for more information.

Tax payers who are non-resident aliens or married filing separately; do not qualify to take these deductions, as well as dependents.
 

by Katie Sapp, Industry Writer