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Issue Number: IRS Summertime Tax Tip
2015-14Inside This Issue
Back-to-School Education Tax
Credits
If you, your spouse or a dependent are heading off to college in the fall,
some of your costs may save you money at tax time. You may be able to claim a
tax credit on your federal tax return. Here are some key IRS tips that you
should know about e tax 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.
• One credit per student. You
can claim only one type of education credit per student on
your tax return each year. If more than one student qualifies for a credit in
the same year, you can claim a different credit for each student. For instance,
you can claim the AOTC for one student, and claim the LLC for the other.
• 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.
• Eligible educational
institutions. Eligible schools are those that offer education
beyond high school. This includes most colleges and universities. Vocational
schools or other postsecondary schools may also qualify. If you aren’t sure if
your school is eligible:
o Ask your school if it is an eligible educational
institution, or
o See if your school is on the U.S. Department of
Education’s Accreditation database.
• Form 1098-T. In most cases,
you should receive Form 1098-T, Tuition Statement, from your school
by Feb. 1, 2016. This form reports your qualified expenses to the IRS and to
you. The amounts shown on the form may be different than the amounts you
actually paid. That might happen because some of your related costs may not
appear on the form. For instance, the cost of your textbooks may not appear on
the form. However, you still may be able to include those costs when you figure
your credit. Don’t forget that you can only claim an education credit for the
qualified expenses that you paid in that same tax year.
• Nonresident alien. If you are
in the United States on an F-1 Student Visa, the tax rules generally treat you
as a nonresident alien for federal tax purposes. To find out more about your
F-1 Student Visa status, visit U.S. Immigration Support. To learn more about
resident and nonresident alien status and restrictions on claiming the education
credits, refer to Publication 519, U.S. Tax Guide for Aliens.
• Income limits. These credits
are subject to income limitations and may be reduced or eliminated, based on
your income.
Visit IRS.gov and use the Interactive Tax Assistant tool to see if you are
eligible to claim education credits. Visit the IRS Education Credits Web page to learn more. Also
see Publication 970, Tax Benefits for Education. You
can get it on IRS.gov/forms at any time.IRS YouTube Videos: IRS Podcasts: |
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