If you spent any money on higher education last year, it may mean savings on your taxes in 2016. If you or a significant other, including a dependent, took higher education courses (i.e., post-high school), there may be a tax credit or deduction for you. In IRS Tax Tip 2016-36, the IRS provides the following facts concerning this key tax break:
The American Opportunity Credit (AOTC) is:
- Worth up to $2,500 per eligible student.
- Used only for the first four years at an eligible college or vocational school.
- For students earning a degree or other recognized credential.
- For students going to school at least half-time for at least one academic period that started during or shortly after the tax year. Claimed on your tax return using Form 8863, Education Credits.
The Lifetime Learning Credit (LLC) is:
- Worth up to $2,000 per tax return, per year, no matter how many students qualify.
- For all years of higher education, including classes for learning or improving job skills.
- Claimed on your tax return using Form 8863, Education Credits.
The Tuition and Fees Deduction is:
- Claimed as an adjustment to income.
- Claimed whether or not you itemize.
- Limited to tuition and certain related expenses required for enrollment or attendance at eligible schools.
- Worth up to $4,000.
If you are eligible, you should have received Form 1098-T, Tuition Statement, from your school by Feb. 1, 2016. Your school also sends a copy to the IRS.