2023 Tax Credits for Higher Education
If you’re worried about the high costs of college tuition and fees, tax credits for higher education could be a possible solution.
Unfortunately, as of December 31, 2020, the Tuition and Fees Deduction is no longer available but there are other options to explore. According to a published article in Marca, parents can still benefit from deducting the tuition fees they pay for their children’s education, which can significantly reduce their tax liability.
Available Tax Credits for Higher Education
American Opportunity Tax Credit: One of the most popular tax credits for higher education is the American Opportunity Tax Credit, which provides up to $2,500 per student.
This credit is calculated as 100% of the first $2,000 in college costs and 25% of the next $2,000 in college costs. It can be used for both tuition and fees, as well as necessary course materials like books, supplies, and equipment.
READ ALSO: Offset Your College Fees With These Tax Credits: LCC and AOTC
Lifetime Learning Credit: Another option is the Lifetime Learning Credit, which can provide a credit of up to $2,000 in qualified educational expenses.
Although this credit is nonrefundable, it can still be a valuable way to reduce the amount owed in taxes. Keep in mind that there are certain eligibility requirements for both of these tax credits for higher education, so be sure to research carefully to ensure you can take advantage of them. Eligible students at accredited colleges or universities can qualify for this credit, with income limits set at $60,000 for the single, head of household, or widowed filers and $130,000 for married filing jointly.
Can you claim both tax credits for higher education?
It’s worth noting that taxpayers cannot claim the Lifetime Learning Credit and American Opportunity Tax Credit at the same time, and cannot claim the Lifetime Learning Credit while deducting fees and tuition. Additionally, those who are dependents or married filing separately are not eligible for the Lifetime Learning Credit.
In conclusion, understanding tax credits for higher education is crucial for those looking to save on college costs. By exploring options such as the American Opportunity Tax Credit or Lifetime Learning Credit, taxpayers can ensure they are getting the most out of their tax advantages and reducing their overall tax liability.
READ ALSO: New Tax Credits for Parents: Discover How To Save Big On Your Taxes
