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Attending College Allows Benefits of College Tuition Tax Credits

irspublication970If you are attending college, you may qualify for college tuition tax credits that can reduce your tax liability when filing.  The federal government offers a couple different college tuition tax credit programs that can be discussed with a tax professional in greater detail to ensure you claim the proper credits for the greatest tax benefit.


How Can a Tax Credit Benefit Me?  The basics.


When filing your income tax return with the federal government, your total taxes due can be decreased by a tax credit.  When you pay for college tuition, you are able to reduce your tax bill by a certain amount based on which college tuition tax credit you may qualify for.  If someone else pays the tuition costs for you, they may be entitled to the tax credit instead of you.


There are two different college tuition tax credit programs available.  The credit amount differs based on various rules, depending on which credit is used, what the money is spent on, and where you live.  Only one credit can be claimed per student per tax year.


American Opportunity Credit


The American Opportunity Credit has replaced the Hope Tax Credit for 2011 and 2012.  The major difference is that the new credit allows lower income families that owe little or no taxes to receive part of the credit paid to them as a tax refund.  The new credit also allows for course books and supplies to be included in the calculation of the credit, as well as tuition and fees like the old credit allowed.  Additional criteria to claim this credit include the student being in their first four years of college, and being enrolled at least half-time in an undergraduate degree program or other reasonable education credential.


Lifetime Learning Credit


The Lifetime Learning Credit requires that the money claimed must have been spent on tuition and fees.  This credit can be claimed for an undergraduate degree program, or a graduate degree program.  This credit can even be used for single courses taken to obtain or develop job skills.


Who Gets to Claim the College Tax Credit?


If a tax filer has a dependent listed on their return, and they paid for the tuition and/or other expenses for that dependent, they may claim the credit.  If you pay your own tuition and aren’t listed as a dependent on another person’s return, you may claim the credit.


More Information About College Tuition Tax Credits


Certain other restrictions and rules apply to College Tuition Tax Credits, so as always, consult with your tax professional prior to filing you federal income tax returns.  The IRS Publication for 2010 returns can also be found on their website in PDF format here:

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