As the summer comes to an end and students head back to college, there are certain federal income tax credits and deductions available to help offset some college costs and relieve some of the financial stress associated with continuing higher education.
The American Opportunity Tax Credit is available for qualified expenses, including tuition and fees, course related books, and other educational supplies. This credit can be up to $2,500 per eligible student and is available for the first four years of post-secondary education. Recently, this federal credit has been extended to the end of December 2017.
Another credit available is the Lifetime Learning Credit, where individuals may be able to claim up to $2,000 for qualified education expenses on your federal tax return. There is no limit on the number of years you can claim this credit for an eligible student, which can include either yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. This credit is very useful for graduate students, students who are only taking one course, or those who are not pursuing a degree.
Individuals can only claim one type of education credit per student on the federal tax return each year. For more information, visit the Tax Benefits for Education Information Center at IRS.gov.