Credits are deducted straight from your tax liability usually preferred over a deduction. Did you know If you have qualifying education expenses you are allowed up to a $2,500 tax credit per student, of which up to $1,000 is refundable on the American Opportunity Tax Credit! The credit equals 100% of the first $2,000 of qualified expenses plus 25% of up to $2,000 in excess, equaling a possible $2,500. What’s a qualified expense? Included are tuition and fees required for enrollment, course materials and textbooks. The limitations on this credit are; you cannot include room and board or activity fees, must be expenses related to the first four years of post-secondary education and only used four times per student.
What tax incentives are there for going to graduate school? The Lifetime Learning credit is a credit worth up to $2,000 per student (20% of $10,000 of expenses per year). This credit can be used for an unlimited number of years and for post-secondary educational expenses.