Case Study 1: Determining the Amount of the Credit
Here is how our volunteer helped taxpayer, Barbara Smith, determine which education credits applied to her family.
| VOLUNTEER |
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BARBARA RESPONDS |
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| Barbara, are you familiar with education credits? |
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They have something to do with tuition. |
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| Yes, they apply to certain expenses for postsecondary education. Did anyone in the family attend college or vocational school during the tax year? |
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My daughter, Carla, is a freshman, going to college full time, and I am taking classes at City College. |
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| There are two kinds of credits — here's a chart comparing the two education credits. [Explains the differences.] |
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Looks like American opportunity for Carla and lifetime learning for me! |
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| I think you're right. You both meet the basic requirements, since you are both on the return and meet the income limits. Do you have your student account information showing the expenses paid? |
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Yes, these are for Carla's tuition, fees, and books for the tax year. These are for extracurricular field hockey. |
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| The books will qualify but her field hockey costs will not. Did she receive any money from an employer, a scholarship, Pell grant, anything like that? |
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Only $5,000 from her grandfather. |
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| We don't need to count the gift. The American opportunity credit is available for a student's first four years of college, so that might be the best for Carla. Now let's look at your expenses. |
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All I have are tuition and fees for two classes in accounting, spring and fall semesters. |
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| Are these to improve your job skills? |
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Yes, but my boss doesn't reimburse me. |
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| Are all of these fees required for your courses? |
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Yes. |
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| You'll be eligible for the lifetime learning credit. |
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I'm so glad you were here to help me! |
