If you qualify for an education tax credit, claiming the credits is fairly simple, especially if you e-file. But you must know what expenses can be claimed.
• Explains how to claim the Hope and Lifetime Learning credits
• Lists the expenses which can be claimed at tax time
• Shows you how to benefit the most from education tax credits.
Make claiming tax credits easier
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There are two education tax credits that can benefit taxpayers who paid tuition at a post-secondary learning institution last year:
• The Hope tax credit designed specifically to help meet the costs of the first two years of college, and
• The Lifetime Learning credit which allows all students, along with graduates and professionals, to claim credit for tuition paid at a college and/or for job-related classes.
We explained earlier how the educational tax credits work, and who can claim them. If you already know you qualify, you can claim either the hope tax credit or the lifetime learning credit fairly easily during the e-filing process.
Sidebar If you decide to take the H&R Block e-filing interview, you will find that claiming the education tax credits is a lot easier to do over the internet. Just answer a few questions, input your expenses, and your credit will be calculated, to the last penny!
What expenses are covered by education tax credits?
The IRS only allows certain education-related expenses to be claimed at tax time:
Tuition, student activity fees, cost of course related books, and the cost of supplies and equipment only if they are considered to be as a condition for enrollment.
In your expense total do not include the cost of books, supplies and equipment not bought at the educational institution. Don't include meals, room and board, voluntary athletic fees, insurance, transportation, or other unrelated expenses.
If you are unsure of the exact amounts you have paid throughout the year, you can call the school. Request that Form 1098-T be sent to you immediately. This statement will list the total qualifying expenses you paid during the year along with other pertinent information you may need about the school.
Warning: the IRS can also request this form from the institution to ensure the truthfulness and accuracy of your tax return.
Filling out the right forms
Before you proceed to the hope tax credit or the lifetime learning credit section of your e-filed tax return, collect the qualified expenses for each eligible student, and have these figures ready to input into your return.
If you file a paper return, you'll need to include IRS form 8863 with your 1040. This is a one-page worksheet, where you compute the hope tax credit or the lifetime learning credit and fill in the pertinent identifying information about the student for whom you're claiming the credit.
Related IRS publications
You can get more information about education tax credits directly from the IRS, in the form of IRS Publication 970 (it's lots of fun.)
If you file a paper tax return, you will also need to attach IRS Form 8863 with your return. (If you e-file, this will be done for you automatically.)
Note: you will need an Adobe Acrobat Reader to view these publications, which you can get here. (But you probably already have it.)
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