If you pay higher for education in 2018 than before, you can see tax savings when you file your tax returns. If you, your spouse, or your dependents take post-high school coursework, you may be eligible for a tax benefit.
There are two credits available to help you offset the costs of higher education: the American opportunity credit and the lifetime learning credit.
The American Opportunity Credit
- Worth a maximum benefit up to $2,500 per eligible student
- Only for the first four years at an eligible college or vocational school
- For students pursuing a degree or other recognized education credential
- Partially refundable. This means if the credit brings the amount of tax owed to zero, 40 percent of any remaining amount of the credit, up to $1,000, is refundable.
The Lifetime Learning Credit
- Worth a maximum benefit 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
To be eligible to claim the American opportunity credit, or the lifetime learning credit, the law requires you or a dependent to have received a Form 1098-T from an eligible educational institution.
For more information on education tax credits, always consult a Certified Public Accountant. Submitted by: Ying Wang, Senior Manager, Tax Services, Thomas Howell Ferguson P.A. CPAs. To ask Ying a question, contact her here.