Education is not cheap and it is difficult for far too many people to pay for their education. The federal government has fortunately developed two different tax credits that can help reduce the amount owed at the time of taxation. These credits, the American Opportunity Credit and the Lifetime Learning Credit help taxpayers who have incurred expenses related to education, such as tuition, fees, supplies, books and other equipment. Any personal expenditure, such as charges, transport costs and insurance, is not eligible for tax credit purposes. For those who pay their tuition with scholarship funds, grants or fellowships, no tax credit is offered. In addition, the credits depend on your income and the amount you can earn annually is restricted. The person claiming the credit can not be claimed as a reliant on the return of someone else.
The American Opportunity Credit enables taxpayers to receive a tax benefit of up to $ 2,500 per qualifying student. The requirements state that the student must be enrolled in the school for at least half a year during the entire academic semester. This credit applies only to those who have a degree in graduation but can also cover certain certifications. Anyone convicted of a crime against drugs can not receive the credit. The AOC is reimbursable by 40%, which means that even those who do not owe taxes can reimburse up to $ 1,000 by claiming the credit. The credit for lifelong learning is not reimbursable, although taxpayers convicted of felony drugs can claim the credit. The LLC also does not set degree or status limitations, so that part – time graduate students can qualify for the benefit. Students eligible to claim the credit can receive up to $ 2,000 annually if the taxpayer claiming the credit has paid their annual taxes. These tax credits do not make education cheaper, but they can make it easier at the time of taxation.