Did you incur any educational costs this tax year? Then you may be able to claim the following five credits on your taxes. These could really help when trying to get the most money out of your tax refund.
1. Qualified Tuition
Of course tuition is the number on expense that qualifies for an education credit on your taxes. Make sure the tuition is from a qualified school. Some examples of qualified institutions are accredited colleges, universities, or vocational schools.
Some student loan interest can help you save on your taxes. If you were legally obligated to pay the interest and you are not filing as married filing separately, then you may be eligible to claim this credit. This can really help with your tax responsibility.
Did you pay qualified tuition and related expenses for the first 2 years of postsecondary education? As long as the student who enjoyed the education is you, your spouse, or a dependent you’re claiming on your taxes, then you claim the Hope credit. You cannot claim this and the Lifetime Learning Credit together.
4. American Opportunity
The American Opportunity Credit is basically the same as the Hope credit, although it modifies it in the following ways.
- The maximum amount of the credit goes up to $2,500.
- It can be claimed for the first 4 years.
- Modified adjusted gross income limitations are increased.
- Qualified expenses include course materials.
- Generally, 40% of Hope Credit is now refundable.
5. Lifetime Learning Credit
This credit is a nonrefundable tax credit that has a dollar limit per family and is available for both undergraduate and graduate levels. It’s calculated by the percentage of the education expenses paid.
With the economy in the tank, university enrollments have increased as people go back to retrain in new skills or seek even higher education in order to stay competitive in the job market. Don't let school break the bank - be smarter and claim all the tax credits you can get!