En esta noticia
The Internal Revenue Service (IRS) in the United States has several tax credits and deductions available to American taxpayers, each with different requirements and different purposes.
In the case of students, there are two types of benefits they can apply for, depending on the type of education they are receiving. In each case, the amounts vary, and only one is refundable.
What is the difference between the two credits?
The IRS distinguishes between its two tax benefits intended for educational expenses:
American Opportunity Tax Credit (AOTC)
This credit allows you to claim up to $2,500 per student. It is intended for those in the first four years of higher education and covers tuition, mandatory fees, and required study materials for the course. Up to $1,000 of the credit can be refunded even if the taxpayer owes no taxes.
Lifetime Learning Credit (LLC)
This credit allows you to claim up to $2,000 per tax return and can be used for undergraduate studies, graduate programs, professional courses, or job training. There is no limit on the number of years you can claim it.
This credit is not refundable; it only reduces the tax burden.
How do you apply for an education credit in the United States?
To claim any of these credits, the applicant must:
- Have had qualifying educational expenses during the corresponding tax year.
- Be enrolled in an eligible educational institution.
- Obtain Form 8863 when filing the Federal Tax Return.
- Keep receipts, tuition statements, and other documents supporting the expenses claimed.
Reasons why your education credit may be rejected
The IRS may reject an education credit claim when:
- The expenses do not qualify under tax rules.
- Incorrect or incomplete information is submitted.
- Not having a valid Form 1098-T.
- Exceeding the limits set by the IRS.
- Claiming more than one credit for the same student.
- Not keeping sufficient documentation.
- Having exceeded the maximum number of years allowed for the AOTC.