by Deborah Ritz
I’ve was enrolled in college in 2015. Are there tax benefits available for college expenses?
If you and your education expenses qualify you have a choice of one of the following:
1. Lifetime Learning Credit is a non-refundable tax credit. You may be able to claim a lifetime learning credit of up to $2,000 for qualified education expenses paid for all eligible students.
There is no limit on the number of years the lifetime learning credit can be claimed for each student.
A non-refundable tax credit reduces the amount of income tax you may have to pay.
Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself.
This means that it can reduce your tax to zero, but if the credit is more than your tax the excess won’t be refunded to you.
2. The American Opportu-nity Tax Credit is a tax credit of up to $2,500 of the cost of tuition, fees and course materials paid during the taxable year. Also, 40% of the credit (up to $1,000) is refundable.
This means you can get it even if you owe no tax. American opportunity tax credit can be claimed for expenses for the first four years of post-secondary education.
Unlike the other education tax credits, the American opportunity tax credit includes expenses for course-related books, supplies and equipment that are not necessarily paid to the educational institution.
3. The Tuition and Fees Deduc-tion can reduce the amount of your income subject to tax by up to $4,000. This deduction is claimed as an adjustment to income.
This means you can claim this deduction even if you don’t itemize deductions on Schedule A (Form 1040).
This deduction may be beneficial to you if you don’t qualify for the American opportunity or lifetime learning credits
You can elect for any year only one of the credits.
For example, if you elect to claim the lifetime learning credit on your 2015 tax return, you can’t also claim the American opportunity credit for 2015.
If you are eligible to claim the lifetime learning credit and you are also eligible to claim the American opportunity credit you can choose to claim either credit, but not both.
More information is available in IRS Publication 970 or at: www.irs.gov.pdf
Questions for Deborah Ritz can be e-mailed to The Weekly Adirondack at WeeklyADK@yahoo.com