Tax credits for students help reduce higher education costs by reducing the tax burden on households with eligible students. In some cases, tax filers can even get a tax refund.

American Opportunity Tax Credit (AOTC)

The Protecting Americans From Tax Hikes Act 2015 (PATH) made the (AOTC) permanent. This tax deductions for student loans is an extension of the previous Hope Loan and can make education cheaper for low-income families and students who would otherwise not be able to go to college.

Lifetime Learning Credit

The Lifetime Learning Credit (LLC) is available for students not pursuing a degree anytime in their post-secondary education. Employees can use this education tax credit to improve their job skills which can raise their earning potential. Unlike the American Opportunity Tax Credit, this credit only reduces income tax and does not benefit filers who do not have a tax liability.

How to qualify for tax deductions for education

Tax filers may be eligible for tax deductions for education if:

1. They paid for "eligible educational expenses" for themselves, their spouse, or family members at a "qualified educational institution" during the tax year or the first three months of the following year. These institutions include vocational schools, universities, colleges, and accredited schools that are eligible for the US Department of Education's Student Aid program.

2. The student is registered for at least one academic period starting in the tax year. Academic periods may be semesters, trimesters or any other period of study specified by the school. The American Opportunity Tax Credit requires students to be enrolled at least part-time while Lifetime Learning Credit requires students to be enrolled in at least one course.

3. The student follows a program leading to a degree or other recognized credential. For Lifetime Learning Credit, students can also work to acquire or refine their ability to work or job skills.

Eligible Expenses

Eligible expenses are used to determine your credit. Examples of eligible expenses include the cost of paying your fees, tuition, and other student-related payments.

The following do not count as qualified training:

• Board and lodging
• Transport
• Child care
• Health care costs
• Other housing or family costs

Non-Resident Alien

If you study in the United States on an F-2 student visa, you are generally treated as a non-resident alien when filing your taxes.

How to Claim Educational Tax Benefits

You can apply for Lifetime Learning Credit, American Opportunity Tax Credit, or any other tuition and fees deductions as a student. According to the IRS, you cannot get more than one of these specific tax breaks for the same person on the same tax return.

Parents who claim two or more students as dependent on their return can claim one student's tax breaks and the other for another student.

To claim any of these tax credits for students, submit Form 8863 "Education Credits" with their tax return.

Typically, students receive Form 1098-T "Tuition Statement" from their departments by January 31 of the following year. This form is used to determine how many eligible education expenses the filing student can claim.

Author's Bio: 

The tax deductions for education is a federal income tax deduction that allows you to subtract up to $2,500 in the interest you paid on qualified tax credits for students from your taxable income.