June 9, 2020

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

  • Taxpayers who have been to or are currently in college may qualify for education expense credit.
  • The American Opportunity Tax Credit can be used towards required course materials as well as tuition and fees.
  • Up to $2,000 of the first $10,000 in qualifying educational expenses can be claimed with the Lifetime Learning Credit.

It is important for taxpayers who have been to or are currently in college to review what possible education expense credits or deductions they could qualify for.

The American Opportunity Tax Credit has replaced the Hope Credit and offers more perks to those looking to either reduce their tax balance or increase their refund. Here are some of the benefits you can receive from the American Opportunity credit:

  • Up to $2,500 can be claimed per student.
  • It can be used towards required course materials (books, supplies, equipment) as well as tuition and fees.
  • It can be applied against four years of higher education, compared to the Hope credit which only covered two years of higher education.

Taxpayers can qualify for this credit as long as their adjusted gross income does not exceed $80,000 for single taxpayers and $160,000 for married taxpayers filing jointly. As a taxpayer’s income increases, the credit will gradually be reduced. For those earning a lower income, they will also benefit because up to 40% of the credit is refundable. This means that taxpayers can expect a check from the IRS if they owe no taxes.

The Lifetime Learning Credit allows qualifying taxpayers to earn an annual credit up to $2,000 of the first $10,000 in qualifying educational expenses. Because there is no limit in place on the number of years of higher education that you can claim, this credit yields a higher credit amount. Taxpayers can receive up to $2,500 per student as long as their income does not exceed more than $58,000 for single filers and $116,000 for those that are married and filing jointly. 

If you need tax help, contact us for a free consultation.