 internal revenue service IRS tax news college students should study up on these two tax credits that's right says the IRS you best study up if you don't want us to take you down but first an attempt at a joke hey diddle diddle who took my fiddle hey diddle diddle the captain diddle the dish man away with the spoon prices jumped to the moon the little dog laughed to see such a sight which i had something to put in my spoon god man i need some food not like drugs or anything like that in my spoon i'm not hunter biden or anything it is not drugs i'm just talking food like good food to put in my spoon do you have any good food oh fiddle sticks do fiddle sticks you mean a bow a fiddle stick is a bow hey wait a second you're the one that stole my fiddle you are the one such a thing you know it to be true tax tip 2022-123 august 11 2022 anyone pursuing higher education including specialized job training and grad school knows it can be pricey that's for sure i wish there was a place we can get some accounting instruction at a reasonable at a reasonable price but in any case eligible taxpayers who paid higher education costs for themselves their spouse or dependence in 2021 may be able to take advantage of two education tax credits there's a link to that here the american opportunity tax credit and the lifetime learning tax credit so you kind of group these together typically in your mind as the kind of education tax credits and you're typically thinking of them together because usually you'll take the one of course that would give you the most benefit if you qualify for it because you can't take both of them at the same time generally and if you don't qualify for that one then you default to the second one so the highest benefit one being the american opportunity tax credit you try to qualify for that if you don't then possibly you still qualify for the lifetime learning credit so they can help offset education costs by reducing the amount of tax they oh if the american opportunity tax credit reduces the tax to zero the taxpayer could receive a refund of $1,000 in other words there's a refundable component to it so you might be saying what good is it going to do me if i'm a student i'm not working that much and so on and i'm the one that's going to be taking the credit then my tax is already basically pretty low because i'm not working much but there's the refundable component to it which means that you could get a benefit from it even if it takes your tax liability below zero which means that technically they still call it a refund but it's not really a refund at that point it's kind of like a benefit type of program so it still may be beneficial to be eligible to claim either of these credits a taxpayer or dependent must have received a form 1090 80 tuition statements so wherever you are taking your education from they should be given you or issuing you a 1090 80 giving you the information at least the stuff that you paid them for example for the tax documentation there's a link to that here from an eligible educational institution however there are exceptions for some students to claim either credit taxpayers must complete form 8863 education credits there's a link to that here if you want to check out that form and file it with their tax return here are some key things taxpayers should know about each of these credits you got the american opportunity tax credit is worth a maximum benefit of up to $2,500 per eligible student only available for the first four years at a post-secondary or vocational school so you got that limitation there for students pursuing a degree or other recognized education credential partially refundable that's the component that lets you take a credit even if your tax liability basically goes below zero taxpayers could get up to $1,000 back that's kind of like the refundable component of it so if you don't have any taxes that you're owing you and your your tax liability is basically zero but you still qualify for the credit you might still get a quote refund even though it's not really a refund at that point it's basically a benefit kind of program at the refundable component so the lifetime learning credit is this is the ones you would take if you couldn't qualify for the other credit because it's worth less typically but you're going to take it if you can if you can get it and you can't qualify for the other one so worth that maximum benefit of up to $2,000 per tax return per year no matter how many students qualify so notice the difference here $2,000 per tax return as opposed to up here where we said $2,500 per eligible student right so big difference on that available for all years post-secondary education for courses to acquire or improve job skills so now you got not that four-year kind of limitation and you've got a different kind of a more inclusive item down here courses to acquire improved or improved job skills available for an unlimited number of tax years so taxpayers can use the interactive tax assistant tool on irs.gov irs.gov to figure out if they're eligible for either of these credits you can check out more information on them if you so choose compare education credits there's a link to that here you also got publication 970 tax benefits for education so there's links to all that stuff here there'll be a link to this in the description