What is an Education Tax Credit?

Education tax credits are credits designed for people who are either in part-time or full-time education. These tax credits are aimed at you if you happen to have any educational expenses. They can be offset against your overall tax bill.

education tax credit

We’re going to go through the main tax breaks and credits and how to claim an education tax credit.

Table of Contents

American Opportunity Credit

The American Opportunity Credit provides you with a chance to get $2,500 off your taxes in education expenses if you happen to be a student who qualifies.

You must be enrolled at a school that’s part of the Federal Student Aid Program. It’s available for the initial four years of attendance, and you must be enrolled as a half time student, at the very least. You also can’t have any felony drug convictions.

The credit covers everything from tuition fees to the textbooks you have to buy. $1,000 of the credit is fully refundable.

Lifetime Learning Tax Credit

The Lifetime Learning Tax Credit is a more available credit because anyone who attends at least one course per year at a school enrolled in the Federal Student Aid Program is eligible for it. You don’t need to be pursuing any form of certification to qualify for it.

The credit covers tuition and any supplies you must purchase if they’re purchased from the school.

The maximum value of the credit is $2,000, and it’s perfect if you’re in postgraduate study.

Do be aware that this is a non-refundable credit.

Try the Education Tax Credit and Deduction Calculator

tax credit calculator

Find out how much you could be entitled to this year by checking out the education tax credit and deduction calculator.

You’ll be able to find out how much you’re entitled to this year with tax credits for students. Just answer some basic questions, and you’ll get an accurate idea of how much you can wipe off your tax bill.

There’s no easier way to find out what you’re entitled to.

Other Student Tax Breaks and Write-Offs

Take note that while parents can claim more than one tax credit for their kids, college students themselves can only take one credit.

Another write-off is $4,000 per year on tuition fees. This is available to all college students and is one of the most popular ones. You can also get $2,500 in the form of a deduction for student loan payments.

Are Education Tax Deductions Different than a Credit?

Yes! Credits reduce your tax liability dollar-for-dollar. Deductions, on the other hand, reduce your taxable income by an amount that’s comparative to the tax bracket you fall into.

Credits are worth much more than deductions.

Where Do I Get an Education Tax Credit Form?

The IRS provides all the relevant forms for claiming education tax credits. In this case, you would be claiming through Form 8863.

This form is available through online tax filing programs, which will automatically fill in the form and submit it with your tax return.

How to Claim Education Tax Credits and Deductions

First, make sure you fulfill the requirements of each tax credit and deduction. The tax software will be able to help you with this by asking you a few questions about your course.

It will determine which credits you’re eligible for and help you claim the education tax credits you can get the most value out of.

If you haven’t already, try online tax filing to file your taxes. It has all the new IRS forms, and it will automatically fill them out for you using the information you provide.