Tax write-offs for higher education. Summary of American opportunity tax credit: For the tax year, you may be able to claim an American opportunity credit of up to $2,500 for qualified education expenses paid for each eligible student. A 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. Forty percent of the American opportunity credit may be refundable. This means that if the refundable portion of your credit is more than your tax, the excess will be refunded to you. Your allowable American opportunity credit may be limited by the amount of your income. Also, the nonrefundable part of the credit may be limited by the amount of your tax. Who can claim this tax credit? Generally, you can claim the American opportunity credit if all three of the following requirements are met. - You pay qualified education expenses of higher education. - You pay the education expenses for an eligible student. - The eligible student is either yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. More on this IRS Tax credit can be found at: http://www.irs.gov/publications/p970/ch02.html IRS Information regarding scholarships or grants, do you owe taxes on these? If you or one of your dependents have received a grant, scholarship or fellowship you may want to take a look at the following page to see if you owe taxes on that. http://www.irs.gov/publications/p970/ch01.html#en_US_2013_publink1000177991 For more information on how to save money on taxes when it comes to education I recommend you have a look at the IRS web page located at: http://www.irs.gov/publications/p970/index.html
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