<\/p>\n
If you pay for the cost of higher education for yourself, your spouse, or your dependent child, you may be eligible for a Federal tax credit<\/a> that can save you money at tax time. This article covers some important facts about education tax breaks<\/a>.<\/p>\n American Opportunity Tax Credit (AOTC)<\/strong><\/p>\n The AOTC applies to qualified education expenses<\/em> for the first 4 years of higher education at an eligible educational institution<\/em>. You can claim a maximum credit of $2,500 annually per eligible student. 40% of the AOTC is refundable, which means that you can get the remaining amount (up to $1,000) as a tax refund<\/a> if the credit brings your tax balance to zero.<\/p>\n Lifetime Learning Credit (LLC)<\/strong><\/p>\n The LLC applies to qualified education expenses<\/em> for undergraduate, graduate, and professional degree courses at an eligible educational institution<\/em>. You can claim a maximum tax credit of $2,000 annually per eligible student. There is no limit on the number of years you can claim the LLC. This tax credit is non-refundable.<\/p>\n Education Tax Credit Qualifications<\/strong><\/p>\n \u2022\u00a0<\/span>Qualified Education Expenses<\/em> \u2014 To figure the amount of your tax credit, you may include the qualified education expenses<\/a> that you paid for an eligible student in the same tax year. These consist of tuition, fees, and other related expenses that are required for enrollment\/attendance at an eligible educational institution.<\/p>\n \u2022\u00a0<\/span>Eligible Educational Institutions<\/em> \u2014 Eligible schools include most colleges and universities that offer education beyond high school. These also include various vocational schools and other post-secondary educational institutions that participate in a student aid program run by the U.S. Department of Education<\/a>.<\/p>\n \u2022\u00a0<\/span>Foreign Students<\/em> \u2014 Those who are in the United States on an F-1 student visa must typically file a Nonresident Alien Income Tax Return (IRS Form 1040NR). However, you cannot claim an education tax credit unless you elect to be treated as a resident alien<\/em> for Federal tax purposes. For more information, please refer to IRS Publication 519 (U.S. Tax Guide for Aliens)<\/a>.<\/p>\n Income Limitations<\/strong><\/p>\n To claim the full amount for the AOTC, your modified adjusted gross income (MAGI) must be $80,000 or less if you\u2019re a single filer ($160,000 or less for married couples filing jointly). The AOTC amount will be reduced if your MAGI is over $80,000 but under $90,000 as a single filer (over $160,000 but under $180,000 for married joint filers). You cannot claim the AOTC if your MAGI is over $90,000 for a single filer ($180,000 for married joint filers).<\/p>\n To fully claim the LLC, your MAGI must be $52,000 or less if you\u2019re a single filer ($104,000 or less for married couples filing jointly). The LLC amount will be reduced if your MAGI is over $52,000 but under $62,000 as a single filer (over $104,000 but under $124,000 for married joint filers). You cannot claim the LLC if your MAGI is over $62,000 for a single filer ($124,000 for married joint filers).<\/p>\n Tax Forms<\/strong><\/p>\n \u2022\u00a0<\/span>Form 1098-T (Tuition Statement)<\/em> \u2014 You will most likely receive IRS Form 1098-T from your school, which reports your qualified expenses to you and the IRS. Note that some of your qualified expenses (such as textbooks) may not appear on Form 1098-T, but that doesn\u2019t mean you cannot claim those costs as part of your tax credit.<\/p>\n \u2022\u00a0<\/span>Form 8863 (Education Credits)<\/em> \u2014 To claim the AOTC or the LLC, you must complete IRS Form 8863<\/a> and attach it to your Federal individual income tax return<\/a>.<\/p>\n