School season is underway and if you, your spouse, or a dependent decided to take higher education courses, some of the expenses such as tuition, books, and fees, may be tax deductible.
Tax credit lowers your overall tax liability and deduction lowers your taxable income, in any case, each one is a boost in the times when higher education costs are on the rise.
The following are the government programs that can help you determine and calculate potential discounts and credits. The two most prominent credits are American Opportunity Tax Credit and Lifetime Learning Credit.
Only one credit can be claimed per student per year. You are at will to claim the one that offers most benefit. Additionally, if you have more that one person in the household attending university/college, their selection of educational credits does not have to be the same. Once again, do the math and pick the credit that benefits each person the most.
The school you attend should send you Form 1098-T which typically includes tuitions you paid to school. Keep in mind that this number may not include certain fees you paid and will not include cost of textbooks and other required course materials. Keep track of those expenses, as you may be able to include them on your tax return.
The IRS has prepared a useful tool to help for a quick eligibility check for education credits. After providing information such as filing status, student’s enrolment status, gross income, and school expenses and when and how they were covered, it will tell you whether or not you are eligible for the American Opportunity Credit, the Lifetime Learning Credit and the Tuition and Fees Deduction. To try it out, clicking on the Interactive Tax Assistant.