To claim one of the two credits, taxpayers must complete Form 8863, Education Credits, and file it with their tax return.
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For many people, getting a higher education is very important and can also be very expensive. Whether it’s preparing for a specialty job or earning an advanced degree, there are a lot of associated costs when it comes to higher education.
Fortunately, there are two education tax credits designed to help cover these expenses. These are the American opportunity tax credit and the Perpetual Learning Credit.
People who have paid for higher education in 2021 can receive these tax credits when they file their taxes. If the taxpayer, their spouse, or dependents took classes at the post-secondary level, they may also be eligible for a tax benefit.
To claim one of the two credits, taxpayers must fill out the Form 8863, Education Credits and file it with your tax return.
These credits reduce the amount of taxes owed. If the credit lowers the taxes due to an amount less than zero, then you could receive a refund.
In order to claim one of these credits, the taxpayer or dependent must have received a Form 1098-T from an eligible educational institution.
Taxpayers should know the following about these credits:
1) The American Opportunity Tax Credit:
–Provides a maximum benefit of up to $2,500 per eligible student.
–Available only during the first four years at an eligible college or trade school.
–It is for students seeking a degree or other recognized education credential.
–The credit is partially refundable. You can receive up to $1,000 in reimbursement.
2) The Perpetual Learning Credit:
–Provides a maximum benefit of up to $2,000 per tax return, per year, regardless of how many students qualify.
–Available for all years of post-secondary education and for courses to acquire or improve job skills.
–Available for an indefinite number of tax years.
Taxpayers can use the tool Interactive Tax Assistant on IRS.gov to check if they are eligible for any of these credits.
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