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Is it better to take the tuition and fees deduction or education credit?

Is it better to take the tuition and fees deduction or education credit?

The educational tax credits offer a bigger tax break to students and parents, but are harder to qualify for. The tuition and fees deduction also offers a savings, but parents can’t claim expenses they pay on behalf of their children. A taxpayer can take only one of the three educational tax breaks in any given year.

Should I take the tuition and fees deduction?

Taxpayers who are eligible for more than one education tax benefit may choose to claim the Tuition and Fees Deduction because it will reduce their adjusted gross income. However, the AOTC generally provides a greater tax benefit for most individuals.

Do I need to file Form 8863?

If you plan on claiming one of the IRS educational tax credits, be sure to fill out a Form 8863 and attach it to your tax return. These credits can provide a dollar-for-dollar reduction in the amount of tax you owe at the end of the year for the costs you incur to attend school.

Can you take the American opportunity credit and tuition and fees deduction?

A. No. You cannot claim the tuition and fees tax deduction in the same taxable year that you claim the American opportunity tax credit or the Lifetime Learning credit. A tax deduction of up to $4,000 can be claimed for qualified tuition and fees paid.

What are the tax credits on form 8917?

Form 8917 offers a tax deduction called the Tuition and Fees Deduction, while Form 8863 offers two tax credits. The two tax credits you can claim on Form 8863 are the American Opportunity Tax Credit and the Lifetime Learning Credit.

What do I need to know about 8863 / 8917?

Once entered, if a dependent who is over 18 does not show on the list, check data entry for that dependent to be sure Over 18 and a student has been selected. You may need to recalculate the return to have the SSN appear in the drop list. A separate 8863/8917 screen is needed for each student for whom a credit is claimed.

What does form 8863 do for income tax?

Form 8863is a tax credit, which gives you a dollar-for-dollar reduction on your income tax. This option is often more appealing to low and middle-income households because it saves you the exact amount of money it offers instead of reducing your payment through a tax bracket percentage. How Does Form 1098-T Affect Form 8917?

Which is the correct line for form 8917?

Once you’ve filled out Form 8917 correctly and entered your deduction on line 6, take that deduction number and enter it on Form 1040, line 34 or Form 1040A, line 19, depending on which form you use (you can’t use Form 8917 with Form 1040EZ ).