Education credits reduce the amount of tax due. The amount of the credit is based on qualified education expenses the taxpayer paid during the tax year.
There are two education credits:
The American opportunity credit allows 40% of the credit to be refundable. There are general rules that apply to these credits, as well as specific rules for each credit. For example, taxpayers can take education credits for themselves, their spouse, and/or dependents (claimed on their tax return) who attended an eligible post-secondary educational institution during the tax year.
For an overview of the various education tax benefits, review the Volunteer Resource Guide, (Tab 13), References - Highlights of Education Tax Benefits.