It is probably safe to assume that the vast majority or individuals if not every individual would like to pay as little in taxes as possible. Tax credits are a way to reduce your tax bill to the IRS, and some tax credits can actually increase your tax refund. The article below has been drafted by a tax attorney at The McGuire Law Firm to provide information regarding two education credits that may able to lower your taxes as you are preparing your 2013 1040 Individual Income Tax Returns.
If you, your spouse or a dependent took higher education classes in 2013, you may be able to claim the American Opportunity Credit or the Lifetime Learning credit on your 2013 1040 tax return. These credits are allowed to help recoup or assist with the cost of the education.
The American Opportunity tax Credit can be worth up to $2,500 for each eligible student, and the credit is available for the first four years at an eligible college or vocational school. This credit will reduce your taxes but $1,000 of the credit can be refunded to you as a refundable credit. To qualify for this tax credit the student must be earning a degree or other recognized credential and be enrolled at least half-time for at least one academic period that started during the tax year. Expenses would include tuition, books, required fees and supplies when calculating the tax credit.
The Lifetime learning credit is limited to $2,000 per tax return, per each year regardless of how many students may qualify for the tax credit. The Lifetime Learning Credit is for all years of higher education, including classes for learning or that improve your job skills. The Lifetime Learning Credit is a non-refundable tax credit and thus can be limited to the amount of your taxes. The credit is for the cost of required fees & tuition, books, supplies and equipments you must buy from the school.
You should receive a Form 1098-T, which is a tuition statement from your school showing the expenses for the year. If or when claiming the credit, you will need to complete Form 8863 and file this form with your 1040 Individual Income Tax Return. If someone else can claim you as a dependent , you cannot claim either credit, and you cannot claim both credits for the same student in regards to the same expense. These credits may be subject to income limitation and thus the amount of the credit could be reduced depending upon your income.
If you have tax questions or issues, please feel free to contact The McGuire Law Firm to speak with a tax attorney. Offices in Denver and Golden Colorado!