This means that even people who owe no tax can get an annual payment of up to $1,000 for each eligible student. Forty percent of the American Opportunity Tax Credit is refundable.That means the full $2,500 credit may be available to a taxpayer who pays $4,000 or more in qualified expenses for an eligible student. The credit equals 100 percent of the first $2,000 spend and 25 percent of the next $2,000.Other expenses, such as room and board, are not qualified expenses. Qualified education expenses are amounts paid for tuition, fees and other related expenses for an eligible student.Here are some more key features of the credit: The credit is available only if the student has not completed the first four years of post-secondary education before 2015.The credit is only available for four tax years per eligible student.Students can claim this credit for qualified education expenses paid during the entire tax year for a certain number of years: Many of those eligible for the American Opportunity Tax Credit qualify for the maximum annual credit of $2,500 per student. Taxpayers should see the instructions to Form 8863 and Publication 970 for details on properly figuring allowable tax benefits. However, amounts shown on this form may differ from amounts taxpayers are eligible to claim for these tax credits. (For 2015, the due date is Februbecause otherwise it would fall on a Sunday.) This form will show information about tuition paid or billed along with other information. Normally, a student will receive a Form 1098-T from their institution by January 31 of the following year. To help determine eligibility for these benefits, taxpayers should visit the Education Credits Web page or use the IRS's Interactive Tax Assistant tool Both are available on IRS.gov. The credits are subject to income limits that could reduce the amount claimed on their tax return. The credits apply to eligible students enrolled in an eligible college, university or vocational school, including both nonprofit and for-profit institutions. To claim these credits on their ta return, the taxpayer must file Form 1040 or 1040A and complete Form 8863, Education Credits. Though a taxpayer often qualifies for both of these credits, he or she can only claim one of them for a particular student in a particular year. The American Opportunity Tax Credit provides a credit for each eligible student, while the Lifetime Learning Credit provides a maximum credit per tax return. Eligible students include the taxpayer, spouse and dependents. In general, the American Opportunity Tax Credit or Lifetime Learning Credit is available to taxpayers who pay qualifying expenses for an eligible student. ![]() WASHINGTON - With another school year just around the corner, the Internal Revenue Service today reminded parents and students that now is a good time to see if they will qualify for either of two college tax credits or other education-related tax benefits when they file their 2015 federal income tax returns. Is it a Bad Debt or a Simple Revenue Loss? Telling the Differenceīusiness Taxes Add Complexity: How Will This Affect You? The New Form 1095-A: Reporting Health Insurance CoverageĪre Your Social Security Payments Taxable?ĭo You Qualify for the Earned Income Tax Credit?Īre You Eligible for Health Insurance Tax CreditsĮmployee Retirement Plans - Tax Advantages and Other Benefitsĥ Business Tax Credits You May Be Missing What You Need to Know About Estimated TaxesĬontractor or Employee? How the Income Tax Obligations Differ Starting Planning for 2015 Income Taxes Now: 5 Tips How to Avoid - And Deal with - Identify TheftĪre You Using the Right Business Structure? Should You Claim the Home Office Deduction? Why You Might Get a Letter from the IRS, and What to Do Are You Claiming All of Your Tax-Deductable Business Expenses for 2015?
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