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Education Tax Credits

There are two tax credits available to help taxpayers with the costs of higher education, The American opportunity tax credit and the lifetime learning credit. If you qualify for either of these credits it could help reduce your tax liability. You must have received a Form 1098-T from an eligible education institution in order to have a chance to qualify for one of these credits.

The American opportunity tax credit is:
• Worth a maximum of $2,500 per eligible student.
• Only for the first four years at an eligible college or vocational school.
• For students pursuing a degree or other recognized education credential.
• Partially refundable. This means if the credit brings the amount of tax owed to zero, 40 percent of any remaining amount of the credit, up to $1,000, is refundable.

The lifetime learning credit is:
• Worth a maximum benefit of $2,000 per year no matter how many students are in your family.
• Available for all years of postsecondary education and for courses to acquire or improve job skills.
• Available for an unlimited number of years.

Your income level could reduce or eliminate any education credits so you want to check with your tax advisor if you will be eligible for a credit or not.


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