It’s tax season. I need help in finding out what, if any, we can claim for my kids college expenses. It would be good to know if we can at least get a couple of thousands of credit from last year’s school expenses as every dollar counts this year. We didn’t have much savings set aside last year with two kids in college. Any tips will be helpful and truly appreciated!
The one that comes to mind is the American Opportunity Tax Credit. Maybe there are others.
Depends on your income. We didn’t get the benefit of any tax credits.
@BelknapPoint probably can explain the AOTC and the Lifetime Learning Credit.
Check tax information in Publication 970. It explains the AOTC and the LLC (lifetime learning credit). Both have income limitations.
The tax programs like turbotax and taxact are pretty good at calculating the credits, but it really helps to know what to expect as there are times it seems like they are adding what should be subtracted.
I strongly second twoinanddone’s recommendation to review IRS Pub 970 on federal tax benefits for education. If after your review you have any specific questions, we can help find answers (or at least make suggestions).
Thank you! I will look into the publication.
Remember as you’re planning that the tax credits/deductions are only for 4 years, despite the fact that a traditional 4 year college education spans 5 calendar years.
So I did some reading of the recommended publication. I think I understand most of what falls under AOTC and LLC. What I want to find out is if my husband and I can and should include/file credits for school fees and books. Here is a bit of background:
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Eldest son, a sophomore, goes to local cc, has excelsior scholarship (NY-tuition covered) but we have to pay for all his school student fees and books. He worked part-time 2108 filed taxes April 2019. The whole year of 2019 he was a full time student, did not work at all. Again we paid for all his student fees and books. We plan to claim him as dependent this time.
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Daughter is a college freshman from a private LAC. Her tuition is covered by grant, has a small fed sub loan, Fed work study, a one time scholarship money from the Red Cross of $250 applied to Fall 2109, and 8 semesters worth of scholarship from NYSHigherEduction Merit scholarship. We paid for her student fees, books, room and board. I know the room and board cannot be claim. We will also claim her as dependent.
My husband and I usually do a joint-filing and our modified AGI usually fluctuates between 96,000-102,000. Can we file for credit at least for the student fees ad books? Since both kids have scholarships and grants, does that mean we will not get any 1098-T form at least from the private LAC? If we can file tax credits for the student fees and books, what does IRS require as proof? Is this where Form 8862 comes in?
Thanks a lot!!!
You should get 1098-T forms from both places because of the school fees. Yes, of course you could file the AOTC for fees, books, & materials. And yes, this is where Form 8863 comes in…
The MAGI limit for married filing jointly is $160,000, so it is worth it to you to file for the AOTC. https://www.irs.gov/credits-deductions/individuals/aotc
Don’t forget to consider which tax years you will claim each student’s AOTC. You can claim the AOTC for four tax years for each student. 4 academic years fall into 5 tax years for most people. For the CC student, waiting to use the AOTC in the years after transferring to the (probably) more expensive 4-year institution might make best sense. In other tax years, the LLC can be used but it is more limited in the expenses that it covers. Books, supplies, and equipment often don’t count for the LLC, but sometimes they do, so read the details carefully.
I kept physical records of Happykid’s expenses in the same file with all the other back-up materials for our taxes, and made a spreadsheet each year that I printed out and filed with that as well. We weren’t ever asked for anything, but I had the paper records.
When you are making that list of books, supplies, and equipment, remember that lots of things can count. Happykid was a Theater Tech/Design major, so the $$$$ pair of lefty fabric shears she needed for Costuming class (brand was specified in the syllabus) counted as an expense for the AOTC as did all the random art supplies from the syllabus for the Color Theory class.
happymomof1, so as long as I keep a recording of all qualified expenses like books, supplies and equipments for the two kids all throughout their 4 years of college, I can file for AOTC for each kid? Can I wait until they are done with college to file this and claim each on the same year?
@kpopmomrunner - You can only claim the expenses for the credit that you paid for in that tax year. You can’t save up receipts and claim them all at once a few years later. The max AOTC is on 4K of expenses/student/year anyhow, so letting them pile up would probably not be a great move for most people even if you could do that.
Circling back to this thread after 3+ months.
The post quoted here is misleading and inaccurate. The American Opportunity Credit can only be used for a maximum of four tax years for an undergraduate student, but the Lifetime Learning Credit can be used for qualified education expenses for an unlimited number of years, as long as all limitations are adhered to and all qualifications are met. The Student Loan Interest Deduction and Tuition and Fees Deduction also are not limited to only four years of use by a student.
Strategic tax planning should be considered for all tax years in which education expenses will be incurred.
@kpopmomrunner - You file the AOTC or LLC for each kid. Details are in IRS Pub 970 https://www.irs.gov/pub/irs-pdf/p970.pdf