The cost of an education is more expensive now than ever. To help students’ mange the expenses of high tuition, textbooks, and more, the U.S. Government provides several sizable student tax credits. These credits are available to students attending eligible colleges and universities, and could save students thousands of dollars a year.
To apply for a student tax credit, you simply use IRS form 1098-T which the school provides students for tax purposes about education-related expenses. Information provided includes the amounts charged for tuition, any payments the student has received, the students enrollment status, and any scholarships the student may have. Students then use this information to file for tax deductions that can save them up to $2,000.00 per year.
There are three student tax credits available
- The Lifetime Learning Tax Credit is available to students who enroll in at least one class from an accredited college, and applies to both undergraduate and graduate schools. Students who qualify for this tax credit can receive credit for 20% of the first $10,000 spent on education related expenses, up to a maximum student tax credit of $2,000.00. To be eligible, students who file taxes as a single can have an adjusted gross income of no more than $52,000.00. Students who file joint returns must make less than $105,000.00
- The American Opportunity tax credit can be worth as much as $2,500 in tax credits on the first $4,000 of qualifying college expenses. One of the great aspects of this tax credit is some of the qualifying expenses include course materials as well as tuition.
- Another option for students is the Hope Scholarship Tax Credit. It is offered to working students who are enrolled at least half-time, and are in their first two years of undergraduate studies. The income limits are identical to the Lifetime Learning Tax Credit, and eligible files may receive 100% of the first $1,000.00, and 50% of the next $1,000.00 of expenses, up to a maximum student tax credit of $1,500.00.