If you or someone you claim on your tax return is going to college this fall, some of your costs could save you money when tax season kicks off. You may be eligible for a tax credit on your federal tax return. Therefore, today we are providing you with tax credits and tips for back to school season that will benefit you during tax time.
This tax credit is worth up to $2,500 annually for eligible students. However, this credit can only be claimed during the student’s first four years of higher education. 40% of the tax credit is refundable. This means that you could get up to $1,000 of the credit back as a refund if you are eligible to receive it.
Lifetime Learning Credit
This tax credit is worth up to $2,000. It does not come with limitations like the American Opportunity Tax Credit, which means you can claim it as long as you are an eligible student.
One Credit per Student
When claiming tax credits keep in mind, you are only eligible to claim one credit per year. However, if the student happens to be your dependent and you have more than one dependent that qualifies, you are able to claim one credit for one student and the other credit for the other student.
Qualified expenses are used to determine your credit. Qualified expenses include things such as the cost for paying your tuition, fees, and other student related expenses. For more information on the rules for each credit, visit the IRS website.
Eligible Educational Institutions
Eligible schools are those that offer education after high school. Most colleges and universities make the cut and some vocational and postsecondary schools qualify. If you are unsure if your school qualifies, ask your school or see if your school is listed on the U.S. Department of Education’s Accreditation database.
Usually, you will receive Form 1098-T from your school by February 1st. This form reports your qualified expenses to the IRS. The amount shown can differ from what you paid. For example, your textbook costs may not appear on the form.
However, you are able to include those costs, usually, when you figure out your credit. Additionally, keep in mind that you can only claim the qualified expenses that you paid for during the tax year you are filing for.
If you are in the US on an F-2 Student Visa, you will generally be treated as a nonresident alien when it comes to filing your taxes. To find out more about this status visit the U.S. Immigration Support website. To learn more about restrictions you may experience visit IRS Publication 519.
Filing Your Taxes with TurboTax
Remember, when you file your taxes with TurboTax, you don’t need to know which schedules to fill out. We’ll ask you simple questions about your life and put your answers on all the appropriate forms.
You’ll get step-by-step instructions through your taxes, expert help when you need it and every deduction and credit that applies to you. We make sure you get the biggest refund possible.