Tax Credits for Low Income Single Mother Students in School
Higher education is expensive, and for a single mother, it can be even more challenging. When you have a low income and a dependent, you might qualify for federal grants to help defray the cost of tuition. You might also be able to take advantage of subsidized and unsubsidized loan programs that, unlike grants, must be repaid. In tax terms, the Internal Revenue Service offers credits and deductions on your federal taxes to help with these expenses.
Other People Are Reading
-
Tax Credits
-
The IRS offers two tax credits to help with the cost of education -- the American Opportunity Tax Credit and the Lifetime Learning Credit. The amount of the credit is applied to your tax liability, thus reducing it by the amount of the credit. Tax credits can be either refundable or nonrefundable. A nonrefundable tax credit reduces your tax liability to zero. A refundable tax credit reduces your tax liability by the amount of the credit, and if your credit exceeds your tax liability, it results in a refund to you.
American Opportunity Credit
-
The American Opportunity Tax Credit is refundable and can result in a refund of up to 40 percent of the credit. You must be enrolled at least half time during one semester of the tax year and pursuing an undergraduate degree or other recognized educational certification. You may claim this credit for up to $2,500 in qualified education expenses, which include tuition, fees, books, supplies and equipment. You must be attending a school qualified to participate in the federal student aid program. To claim this credit, your income may not exceed $90,000 -- $180,000 if filing jointly. You may claim this credit for only the first four years of school and not if you have a felony drug conviction.
-
Lifetime Learning Credit
-
The Lifetime Learning Credit is nonrefundable and can only reduce your tax liability to zero. You may take this credit even if you are not pursuing a degree or certification if you take at least one course. You may accept up to $2,000 per return for qualified expenses that include tuition, fees, books, supplies and equipment, but only if they are paid directly to the school; the costs must be mandatory. Your income may not exceed $60,000, or $180,000 if filing jointly. The credit is still available to those who have a felony drug conviction.
Miscellaneous Information
-
You may apply only one tax credit per tax year. In addition to tax credits, the IRS also allows tax deductions for tuition and fees. Tax deductions may not be combined with tax credits. You can also reduce your income, and thereby your tax liability, by writing off the interest on student loans. You may apply the interest deduction with a tax credit or other deduction, and reduce your income by up to $2,500 if you are enrolled at least half time in a degree program. The loan may not come from a relative or employer, and must be used to pay only for tuition, fees, books, supplies, equipment, room and board, transportation or other necessary expenses. Felony drug convictions do not apply to tax deductions.
-
