education credits 1. what is a tax credit credits are designed to offset tax liability refundable...

Education Credits

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What is a Tax Credit• Credits are designed to offset tax liability• Refundable credits• Nonrefundable credits• American Opportunity is refundable up to $1,000• Lifetime Learning Credit is nonrefundable

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American Opportunity Credit

• Eligible expenses:o Tuition and fees required to enrollo Books, supplies, and equipment required by school or courses

• Expenses that are not eligible:o Room and Boardo Travelo Parkingo Expenses that are not required to enroll/attendo Tuition and fees covered by a grant or scholarship

• $2,500 limit, $1,000 max refundable amount per student

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American Opportunity Credit

• For undergrads, 2 year programs, or other recognized educational credentialo Must be pursuing a degree

• Only available for 4 years• Student must be enrolled at least half time • Student cannot have a felony drug conviction• Cannot claim credit, if a dependent• MFS cannot claim education credits• Must be a US citizen or resident

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Lifetime Learning Credit

• Eligible expenses:o Tuition and fees required to enrollo Books, supplies, and equipment required by school and purchased from

the educational institution

• Expenses that are not eligible:o Room and Boardo Travelo Parkingo Expenses that are not required to enroll/attendo Expenses that are reimbursed by your job, scholarships, or grants

• $2,000 limit per tax return

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Lifetime Learning Credit

• Available for all years of post secondary education

• Taking classes or courses to improve job skillso Student does not need to be pursuing a degree

• Cannot claim if MFS filing status• Cannot claim if you are a dependent

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TaxWiseForm 8863

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• Enter qualified expenses under the correct credit and it will transfer to the 1040

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