Education Tax Credit And Deductions

American Opportunity Tax Credit

Eligibility criteria

• A student must be pursuing a recognized educational credential such as a certificate or degree
• Must attend an accredited institution as determined by the US Department of Education
• Must be half-time for at least one academic period
• Must not have finished the first four years of college at the beginning of the tax year (and by definition – cannot be a graduate student)
• Must not be convicted of felony drug conviction at the end of the tax year

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Credit amounts for 2022 and 2023

Per eligible student

• You can get a tax credit for up to $2,500 to cover tuition, fees, and course materials for the tax year ($10,000 for 4 years)
• A tax credit is given for the 100% of the first $2,000 and 25% of the next $2,000 paid during the tax year
• If you owe no tax, you can get 40% or $1,000 refunded to you per calendar year.

What’s not covered

Expenses for transportation, dorm and living expenses, transportation, and medical expenses are eligible for AOTC credit.

Income limits to qualify for the AOTC

• Your modified adjusted gross income must be $80,000 or less for single filers and $160,000 or less if you are married and filing jointly
• You can get reduced credit if your modified adjusted gross income is over $80,000 but less than $90,000 for single filers (and over $160,000 but less than $180,000 for married filing jointly)
• No credit if your modified gross income is greater than $90,000 (singles) and 180,000 (married filing jointly)

Claiming the credit

You can claim the credit by filling out IRS Form 8863 and Form 1098-T, which you will receive from your school. You will need to provide your school’s employer identification number (EIN) on Form 8863.

You must file taxes to get the AOTC. This is the case even if your income is below the minimum standard income required to file income taxes.

Lifetime Learning Credit

The Lifetime Learning Credit is in some ways similar to the AOTC but there are also some key differences.

• First, you don’t need to get a degree to get the credit – a course to improve your job skills is eligible for credit.
• AOTIC can only be claimed for four years. There is no limit to the number of years you can claim the LLC.

Eligibility criteria

• A student must be enrolled at an eligible educational institution
• Must take a  higher education course (graduate, undergraduate or certificate courses). This includes courses to improve your job skills
• A student must be enrolled for at least one academic period  in the tax year

Credit Amount for 2022 and 2023

The maximum Lifetime Learning Credit is 20% of up to $10,000 in eligible expenses or $2,000. Eligible expenses include tuition costs, fees, books, and supplies required for taking the courses.

Income limits for 2022

The LLC starts phasing out at a modified adjusted gross income (MAGI) of $80,000 ($160,000  if you file jointly). At a MAGI of $90,000 ($180,000 for joint filers), you will not qualify for Lifetime Learning Credit

Claiming the credit

To claim the Lifetime Learning Credit, you have to fill out form IRS Form 8863. This credit is non-refundable – you cannot get a refund from the IRS if you owe no taxes.

Student loan interest deduction

You can deduct the interest you paid on your student loans from your taxes. This applies to students and parents who are in the process of paying back their loans. You can deduct the lower of $2,500 or the total amount of interest you paid during the tax year. This deduction is an above-the-line adjustment to your income, so you don’t need to itemize to take it.

Other criteria for student loan interest deduction

• You must have paid interest on a qualified student loan for the tax year
• Your MAGI is less than $90,000 (or $185,000 if filing jointly). The deduction is phased out gradually between MAGI of $75,000 and $90,000 for single filers (and $155,000 and $185,000 for joint filers)
• You will receive form 1098-E from the lender if you paid more than $600 in interest for the tax year. If you have more than one lender, you will receive multiple 1098-E forms.
• Filing status is not married filing separately

All In One Homeschool

Though the All In One Homeschool site is meant for parents homeschooling their kids, it is a great resource for any parent.  It covers materials from Pre–K to Grade 7. Each grade level on the website has 180 days of content.

It’s sister site, All in One High school has similar materials for grades 8-12.

Math Game Time

Math Game Time has math games that fun as well as educational for Pre-K to Grade 7. The site also has worksheets by grade that you can print.

Education.com

Education.com offers lesson plans by grade level.  It also has worksheets and games to keep kids engaged.  I have been able to get by with the free plan.

Science Kids

Science Kids, as the name states is a site focused on science.  The site has science experiments, cool facts, games, lesson plans, quizzes, videos, and photos.  If your kids are looking for science fair ideas, this site will give them plenty of ideas to explore.

Khan Academy

KhanAcademy is one of the most popular sites among students.  Khan Academy offers personalized lessons for every subject.  You can learn online at your own pace.

TheFactSite.com

Thefactsite.com has facts organized by category.  Kids can click on a topic that they like and learn fun facts.  If your kids are into trivia, this is a great resource for them.

Subscription Boxes for Kids

Subscription boxes are not free but they keep the kids engaged.  My son waits for these boxes to arrive every month and gets the project done the same day the box arrives.

Here are two subscription boxes I like the most.

KiwiCo – This is a great subscription box for kids.   There is a box for every age group. KiwiCo sends a box every month with a cool project.

STEM Club – Another subscription box focused on STEM.  You can subscribe directly through Amazon.

Bottom Line

There are plenty of free educational resources for your kids.  Whether you need online games or worksheets, you can find them for free.  Subscription boxes are the only ones that I have found to be worth paying for.  The projects are really cool and the kids look forward to receiving the boxes every month.