Welcome to the pilot grind. Today, we're going to talk about tax credits and the tax opportunities you have to save money as a college student. So, we're gonna talk about the American Opportunity Tax Credit and the Lifetime Learning credit. The American Opportunity Tax Credit is a refundable credit, which means that you can get more on your tax refund. You can actually use up to or get a credit of up to $1,000 if you are independent and claiming yourself, and up to $2,500 if you're being claimed by your parent. So obviously, it benefits you too to be claimed by your parent because they can get up to $2,500 in extra refund. To qualify for the American Opportunity Tax Credit, you will need to use the 1098-T form. You can ask your university, usually via email, to send it to you electronically. Then, you can go ahead and print it out and take it to your tax preparer. Remember, you can use the American Opportunity Tax Credit for up to four years, targeting those who are pursuing a bachelor's degree. Now, let's talk about the Lifetime Learning credit. This is a non-refundable credit, which means that it will reduce your tax liability but will not add on to your refund. You can use the Lifetime Learning credit year after year, but the cap on that is $2,000. For example, if you owe $2,500 and your tuition was $3,000, the maximum cap is $2,000. This will reduce your tax liability by $2,000, making you liable for only paying $500 to the IRS. The Lifetime Learning credit is also for those who are in graduate school, who have already used the American Opportunity Credit for the first four years. They cannot use the Lifetime Learning credit for their graduate master's degree, their PhD,...
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8863 Instructions 2023-2024 Form: What You Should Know
To claim the standard education credits, you must provide the following information: a. Filled-out tax form with the student's full name b. The date of the year that the student attended the educational institution. c. The actual tuition and fees paid per semester or semester-equivalent degree. d. The actual cost of the course in which the student received credits and the amount it equals when divided by the full-time equivalent to the student's selected degree for the period of study. e. The student's actual academic credit hours as defined in Section 24(c)(2). f. The amount of academic credits awarded by the educational institution. 3. Enter any amount on Form 8863 that is a student's income reported on the taxpayer's Form 1040 for year the student attended the educational institution. 4. Report the total of the amount from Form 8863 and any applicable nonqualified tuition and fees and any other amounts paid by you, your spouse, or a trust or estate of which you are a beneficiary as income received by using Form 1040, line 21. Report it as “adjusted qualified education expenses” on line 21 of your tax return. The form allows for a tax year and for you to claim your credit only once. The form allows for a tax year “Qualified education expenses” means qualified expenses for tuition and related fees, books, supplies, equipment, etc. related to the provision of an education, including fees for correspondence courses. However, the expenses don't include tuition and related fees paid for a public, nonprofit educational institution or a religious school. Qualified expenses are the actual amounts paid to an educational institution that you or your spouse or a trust or estate of which you are a beneficiary. Qualified expenses are limited to the tuition, fees, books and supplies for each year of attendance, as well as certain fees, such as books (other than textbooks of instructional, tutorial or research type used solely for the purpose of instruction), laboratory supplies, and tuition and transportation for the person required to enroll in a course for which a tuition and related fees charge has been made. When you claim a tax credit, you must include the amount you claim on your return on the form and attach it. If the amount of the expense is more than the eligible educational expenses, you can claim the difference as an adjustment on your tax return.
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