ElectroFile Income Tax Service   Income Tax Service   Terry Hough, President
Terry Hough

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April 03, 2013 Newsletter

Two Education Credits Help Pay Higher Education Costs

The American Opportunity Credit and the Lifetime Learning Credit may help you pay for the costs of higher education. If you pay tuition and fees for yourself, your spouse, or your dependent you may qualify for these credits.

Here are some facts you should know about these important credits:

The American Opportunity Credit

The Lifetime Learning Credit

You cannot claim either of these credits if someone else claims you as a dependent on his or her tax return. Both credits are subject to income limitations and may be reduced or eliminated depending on your income.

Keep in mind that you canít claim both credits for the same student in the same year. You may not claim both credits for the same expense.

Parents or students claiming either credit should receive a Form 1098-T, Tuition Statement, from the educational institution(s). You should make sure it is complete and correct.

Form 1098-T will show the amounts billed by the education institution(s) and any scholarship amounts reeceived. You must be able to document the expenses paid and reduce them by any scholarship amounts received. The net qualified expenses are the costs you may claim on Form 8863 for The American Opportunity Credit or The Lifetime Learning Credit.

Find out more details about these credits and other college tax benefits in Publication 970, Tax Benefits for Education or see your ElectroFile tax professional.

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