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Tax Credits and Deductions

Free Money: AOTC Claiming Strategies

Once upon a time, the American Opportunity Tax Credit was a pretty simple proposition: Families could get a $2,500 annual tax credit for $4,000 of out-of-pocket college tuition expenses for their dependent student, as long as their income was below the IRS threshold for the credit. However, tax law changes over the past few years have created some opportunities for creative claiming strategies, opening the tax credit up to a larger population.

Education Tax Credits: AOTC

Currently two tax credits exist to help defray higher education expenses, the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit. Each is slightly different but for most families, the AOTC is the most beneficial. The maximum annual AOTC credit is $2,500 per student. Eligibility is limited to undergraduates who are enrolled at least half time for at least…

What do I do with Form 1098-T?

Form 1098-T is a tuition statement that colleges and universities are required to provide. The 1098-T shows “payments received for qualified tuition and related expenses” and scholarships received, provided they either came from the college or were disbursed directly to the college. Form 1098-T is used for two purposes: To verify tuition expenses for taxpayers claiming the AOTC or LLC….

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