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School’s In: Lessons on Educational Tax Credits

Today, if you want to land a great career in fields such as financial planning, accounting, or bookkeeping, you’ll need more than just a high school diploma. Most industries require college degrees, and as more people start or go back to school, several are unaware of the available educational tax credits.

While the Lifetime Learning Credit reduces only the amount of tax that you owe, the American Opportunity Tax Credit both reduces the amount you owe and refunds you up to $1,000. These credits are applicable even if you study outside of the United States.

No limit exists for the number of years you’re allowed to claim the Lifetime Learning Credit, worth up to $2,000. However, you can claim the American Opportunity Tax Credit, worth up to $2,500, only during the first four years of college. Both credits are subject to income limits.

To figure out your credit amount, you can use only qualified expenses, which include tuition, fees and textbooks. For these expenses to qualify, they must be for attending or enrolling at an eligible educational institution.

Most colleges and universities are eligible, as well as some vocational and post-secondary schools. You can check the US Department of Education database if you’re unsure about your school’s eligibility.

The team at Patrick & Robinson CPAs would be happy to help make sure you’re maximizing your educational tax credits!

Contact us at (904)396-5400 or at office@CPAsite.com .

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