What Education Credits are Available?
Taking advantage of any tax credit you qualify for can reduce your tax burden significantly. Filling out IRS forms can be daunting and confusing, especially when it comes to knowing what credits and deductions you can claim. The tax relief credits you may qualify for aren’t always clear. You don’t want to miss out on any tax benefits you’re entitled to, but you also don’t want to raise any red flags by claiming a credit that you don’t qualify for.
Some of the education credits are significant and can help relieve some financial burdens you may be experiencing while attending school, along with having a job and other responsibilities. If you’ve attended college this year or are currently attending college, there are some tax relief options available. Here are some of the details so you don’t miss out on important tax advantages.
The American Opportunity Tax Credit
The American Opportunity Tax Credit helps taxpayers potentially increase their tax refund or reduce their balance owed. You can claim up to $2,500 in tax credits on your tax return, which can be used to purchase school supplies and materials, as well as be applied to tuition and other associated fees. The amount of tax relief you receive depends on your adjusted gross income. Single taxpayers should not exceed an adjusted gross income of $80,000, and married taxpayers filing jointly should not exceed $160,000. Anyone with a lower income than these numbers can take advantage of a refundable credit of up to 40%, which is received in the form of a check directly from the IRS if no taxes are owed.
The Lifetime Learning Credit
The Lifetime Learning Credit is also an important education credit to pursue. It allows taxpayers to take advantage of up to a $2,000 credit each year out of the first $10,000 in educational expenses. And as long as a taxpayer’s adjusted gross income does not exceed $58,000 for individuals and $116,000 for married filing jointly taxpayers, then a credit of up to $2,500 can be claimed. As the credit name indicates, there’s no limit on how many years you can claim the Lifetime Learning Credit, as long as you are enrolled in college and incurring educational expenses.
Rocket Tax offers virtual credit counseling and tax preparation to ensure you receive all of the tax benefits you can take advantage of. Education credits can put money directly back into your pocket, but you just have to remember and keep track of all the expenses you incur related to your education. Any tax relief amount can help you reduce the amount you owe after filling out your IRS forms or potentially give you a nice increase in your tax refund. We are here to help you make sense of all the education credits available to you, so contact us today to schedule an appointment and speak with a tax professional.