How to Qualify for the Education Credit on Your Taxes
- 1). Pay the tuition for post-secondary education for yourself, your spouse or your dependents. To qualify for the American opportunity credit, the student must be in the first four years of post-secondary education and be pursuing an undergraduate degree. To qualify for the lifetime learning credit, the student can be in any year and does not have to be seeking a degree.
- 2). Pay in the current tax year for classes starting either in the current year or the first three months of the following year. For example, to qualify for an education tax credit for 2011, pay during 2011 for classes starting in January 2011 through March 2012.
- 3). Compare your modified adjusted gross income (MAGI) to the limits for claiming the education tax limits based on your filing status. These limits differ for each credit and may be adjusted for inflation. The IRS publishes most limits in Publication 970 (see References). Your MAGI for both credits equals your adjusted gross income (AGI), found on line 22 of Form 1040A or line 38 of Form 1040, plus the foreign income exclusion, the foreign housing exclusion, the foreign housing deduction, the exclusion of income by bona fide residents of American Samoa, and the exclusion of income by bona fide residents of Puerto Rico. If none of these apply to you, your MAGI equals your AGI.
- 4). Complete Form 8863 (see Resources) to calculate the value of your education credits for your income taxes. Use Part I of the form to calculate your American opportunity credit and Part II to calculate the lifetime learning credit.
