Students can accumulate tax reimbursements of up to $2,500 for tuition, books and supplies. Find out if you qualify for either the American Opportunity or the Lifetime Learning tax credits with information from TurboTax in this video on annual tax filing.
Here is some important information on how students can reduce their income taxes.
If you attended even a single course during the year, you may qualify for one of the many tax saving benefits the federal government offers to students. The most valuable of these benefits are the American Opportunity and Lifetime Learning tax credits, which can reduce the amount of taxes you owe on a dollar for dollar basis.
The American Opportunity tax credit can potentially reduce your tax bill by $2,500 for the tuition, fees, books, and supplies you pay for during the first four years of school. However, you must be working toward a degree to qualify. Even if you don't owe any taxes, the IRS will send you a refund check equal to 40 percent of the credits you qualify for.
The Lifetime Learning tax credit is a little easier to qualify for. However, the maximum tax reduction you can receive is $2,000 for all educational expenses you are required to pay directly to the school such as tuition and required books, and equipment. To qualify, all you need is to show that you attended at least one course during the year.
Regardless of whether it's your first year in school or your tenth, if you are not eligible for either of the tax credits, you may qualify for the tuition and fees deduction up to $4,000. This tax deduction is available only through 2016 (later extended through 2020) whether you itemized your tax deductions or not. For more information about tax breaks for students, visit TurboTax.com.