We are often asked about college tax credits.
One of the largest credits on the books is the American Opportunity Credit which tops out at $2,500 each year.
In order to qualify for this credit, the family income cannot exceed $180,000 ($90,000 if single).
This credit allows for a 100% return of the first $2,000 spent, plus 25% of the next $2,000 spent. The money must have been paid during the taxable year for tuition, fees, and required course materials.
Colleges and Universities will provide students with a form 1098-T in January, and that form is needed in order to prepare your tax return. This form reflects tuition only, so in addition, you must provide your accountant with the amount paid for books and required course materials including calculators, tablets, or laptops.
This credit is only good for the first four years of college (undergraduate degree).
There are other vehicles which might help with expenses beyond the four years such as the Lifetime Learning Credit or Tuition and Fees Deduction.
In order to claim the American Opportunity Credit, you must complete a Form 8863 and attach that to your 1040.
Any benefit from scholarships and 529 Plans must also be taken into account.