Students, parents urged to check 2 federal college tax credits

IRS posts information online as colleges open 2015-16 school year

California parents and students should check now to see if they will qualify for either of two college tax credits when they file their 2015 federal income tax returns.

In general, the American Opportunity Tax Credit or Lifetime Learning Credit is available to taxpayers who pay qualifying expenses for an eligible student, according to a report sent this week by the Internal Revenue Service.

In a report, Raphael Tulino, who handles media relations for the IRS in the Bay Area, as well as in Southern California and Nevada, said eligible students include the taxpayer, spouse and dependents. The AOTC provides a credit for each eligible student, while the Lifetime Learning Credit provides a maximum credit per tax return.

Consider that in the tax year 2013, Tulino said, more than 1.2 million California taxpayers claimed the AOTC worth more than $948 million on their taxes. Almost 1.1 million claimed the Lifetime Learning Credit, resulting in $1.1 billion in tax savings.

Nationally, 9.7 million taxpayers claimed the AOTC while 10 million claimed the Lifetime Learning Credit in 2013. Both credits combined helped taxpayers offset higher education costs by $19.4 billion.

Other key points:

A taxpayer often qualifies for both of these credits, but the rules say that only one can be claimed for a particular student in a particular year.

Taxpayers should complete Form 8863 (Education Credits) to claim either credit.

The credits apply to eligible students enrolled in an eligible college, university or vocational school, including both nonprofit and for-profit institutions.

The credits are subject to income limits that could reduce the amount claimed on their tax return.

Many of those eligible for the AOTC qualify for the maximum annual credit of $2,500 per student.

The Lifetime Learning Credit of up to $2,000 per tax return is available for both graduate and undergraduate students. Unlike the AOTC, the limit on the Lifetime Credit applies to each tax return, rather than to each student. Also, the Lifetime Credit does not provide a benefit to people who owe no tax.

Tulino also reminds students applying for financial aid, that they can use the IRS Data Retrieval Tool on the FAFSA website to import tax return information to their financial aid application. The temporary shutdown of the Get Transcript tool does not affect the Data Retrieval Tool. Applicants may also click on the "Help Page" for more information.

To help determine eligibility for these benefits and for complete details on all of the tax benefits for education, visit the Education Credits Web page or use the IRS's Interactive Tax Assistant tool. Both are available online at

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