<p>I just submitted my FAFSA and they recommend we take a look at this website: Tax</a> Benefits | Federal Student Aid</p>
<p>Supposedly, we are legible to get up to 2500/yr from one organization and 2000/yr from another. Do we have to work to receive this? I don't understand how it works, does someone understand or has someone gone through this?</p>
<p>Any help is truly appreciated, thank you.</p>
<p>Here is the IRS website:</p>
<p>[Education</a> Credits](<a href=“http://www.irs.gov/Individuals/Education-Credits]Education”>Am I Eligible to Claim an Education Credit? | Internal Revenue Service)</p>
<p>It depends on your situation, but many people take the AOC (you can only take one), there are a couple of current threads on it, and if you use the Search function for AOC, you will find more.</p>
<p>Thank you for all that info!
I just went through some of those threads, but it’s difficult for me to understand how to exactly go about it. If anyone could explain?</p>
<p>At present, there are three tax benefits available on Form 1040:
<p>Most people would claim AOTC over LLTC or Tuition and Fees Deduction for their out-of-pocket education expenses.</p>
<p>If you can’t claim the AOTC, then you have to compare which LLTC or Tuition and Fees Deduction would give you more benefits.</p>
<p>Always talk to your tax expert on any tax matters</p>
<p>When your parents fill out their taxes, if they paid qualified expenses for your education in that tax year, then they can include that information on their tax return and claim either, but not both, the American Opportunity credit or the Lifetime Learning Credit. Generally the AOC provides the biggest benefit. Are your parents generally knowledgeable about filing taxes? If so, ask them to explain to you how tax returns and tax credits work.</p>
<p>Thank you both so much! I believe I understand now.</p>
<p>There are 2 education tax credits. They do not come from organizations. They are tax credits on your tax return for qualified education expenses you paid in the tax year. So expenses paid for in 2013 would be on your 2013 tax return.</p>
<p>You cannot get both tax credits - you have to choose which one is better for your own situation.</p>
<p>The American Opportunity tax credit is a tax credit of up to $2500. To receive the full credit you must pay $4000 of qualified education expenses (generally tuition&fees and required books/supplies - room and board are not qualified expenses). The credit is 100% of the first $2000 and 25% of the next $2000. 40% ($1000) is a refundable credit meaning you can get up to 40% even if you paid no taxes.</p>
<p>The lifetime learning credit is a maximum of $2000. It is based on 20% of the first $10,000 of qualified expenses, so you must have $10,000 to get the max credit. None is refundable so you must have $2000 of taxes to get the full credit.</p>
<p>There is also a tuition and fees deduction where you can reduce you taxable income (not your taxes like the credits) by up to $4000.</p>
<p>Read through Publication 970 at [Internal</a> Revenue Service](<a href=“http://www.IRS.gov%5DInternal”>http://www.IRS.gov) for the details.</p>