There are many families who cannot qualify for financial aid. So, how can people afford the cost of higher education if there aren’t any loan programs willing to help? Well, when need-based aid isn’t available, there are tax credits that will reduce your tax bill and free up money for school. The American Opportunity Tax Credit can pay up to four years of undergraduate education costs. This credit option offers a reduction off of your tax bill, dollar-for-dollar. Your 2016 taxes could potentially be reduced up to $2,500 per student. Per IRS.gov, AOTC consists of 100% of the first $2,000 of qualified education expenses — tuition, fees and course materials — and 25% on the next $2,000. However, it phases out at higher income levels — $160,000 to $180,000 for married couples filing jointly and $80,000 to $90,000 if the tax filer is single or head of household. Another option is the Lifetime Learning Credit , which is a $2,000 tax credit for $10,000 of graduate school expenses. This credit has lower income limits — $55,000 for single filers and $110,000 for married couples filing jointly. Photo credit: Tax17news.com
