Whether you have dependents living at home or if you're a student saving for college, here are some educational tax breaks that you should know about come tax time.
The Lifetime Learning Credit
The Lifetime Learning Credit (LLC), is a federal tax credit many individuals who are taking college courses can take advantage of. It provides a tax credit up to 20 percent of the first $10,000 in tuition and other qualifying expenses per year. To be eligible, you need to be enrolled in at least one course at a qualifying higher education institution (income limits apply).
The American Opportunity Tax Credit
The American Opportunity Tax Credit (AOTC) provides up to $2,500 in tax credits on the first $4,000 of qualifying educational expenses, and applies to all four years of an undergraduate education. It is a partially refundable credit so in the event your tax liability is at zero, you may still be eligible to receive up to $1,000 of the credit. To be eligible, you must be in the first four years of your education and be enrolled at least part-time in a college, university or other accredited post-secondary educational institution (income limits apply).
The tuition tax deduction
If you don't qualify for the AOTC, the tuition tax deduction may be your next best bet. With this credit, you may be able to reduce your taxable income up to $4,000. To be eligible in 2018, you need to have a modified adjusted gross income of $80,000 or below if single, and $160,000 if married and filing jointly with your spouse.
To find out more about educational credits, deductions, and savings plans, visit the IRS Tax Benefits for Education Information Center.