Parents and students should see if they qualify for either of two college education tax credits or any of several other education-related tax benefits.

In general, the American opportunity tax credit, lifetime learning credit and tuition and fees deduction are available to taxpayers who pay qualifying expenses for an eligible student.

Eligible students include the primary taxpayer, the taxpayer’s spouse or a dependent of the taxpayer.

Though a taxpayer often qualifies for more than one of these benefits, he or she can claim only one of them for a particular student in a particular year.

The benefits are available to all taxpayers – both those who itemize their deductions on Schedule A and those who claim a standard deduction.

The credits are claimed on Form 8863 and the tuition and fees deduction is claimed on Form 8917.

All three benefits are available for students enrolled in an eligible college, university or vocational school, including both nonprofit and for-profit institutions.

None of the credits can be claimed by a nonresident alien or married person filing a separate return.

Normally, a student will receive a Form 1098-T from their institution by the end of January of the following year. This form will show information about tuition paid or billed along with other information. However, amounts shown on this form may differ from amounts taxpayers are eligible to claim for these tax benefits.

American opportunity tax credit

Many of those eligible for this credit qualify for the maximum annual credit of $2,500 per student. Here are some key features of the credit:

1. The credit targets the first four years of post-secondary education, and a student must be enrolled at least half time. This means that expenses paid for a student who, as of the beginning of the tax year, has already completed the first four years of college do not qualify. Any student with a felony drug conviction also does not qualify.
2. Tuition, required enrollment fees, books and other required course materials generally qualify. Other expenses, such as room and board, do not qualify.
3. The credit equals 100 percent of the first $2,000 spent and 25 percent of the next $2,000. That means the full $2,500 credit may be available to a taxpayer who pays $4,000 or more in qualified expenses for an eligible student.
4. The full credit can only be claimed by taxpayers whose modified adjusted gross income (MAGI) is $80,000 or less. For married couples filing a joint return, the limit is $160,000. The credit is phased out for taxpayers with incomes above these levels. No credit can be claimed by joint filers whose MAGI is $180,000 or more and singles, heads of household and some widows and widowers whose MAGI is $90,000 or more.
5. Forty percent of the American opportunity tax credit is refundable. This means that even people who owe no tax can get an annual payment of up to $1,000 for each eligible student.

Lifetime learning credit

This credit of up to $2,000 per tax return is available for both graduate and undergraduate students. Unlike the American opportunity tax credit, the limit on the lifetime learning credit applies to each tax return, rather than to each student. Though the half-time student requirement does not apply, the course of study must be either part of a post-secondary degree program or taken by the student to maintain or improve job skills. Other features of the credit include:

1. Tuition and fees required for enrollment or attendance qualify as do other fees required for the course. Additional expenses do not qualify.
2. The credit equals 20 percent of the amount spent on eligible expenses across all students on the return. That means the full $2,000 credit is only available to a taxpayer who pays $10,000 or more in qualifying tuition and fees and has sufficient tax liability.
3. Income limits are lower than under the American opportunity tax credit. For 2012, the full credit can be claimed by taxpayers whose MAGI is $52,000 or less. For married couples filing a joint return, the limit is $104,000. The credit is phased out for taxpayers with incomes above these levels. No credit can be claimed by joint filers whose MAGI is $124,000 or more and singles, heads of household and some widows and widowers whose MAGI is $62,000 or more.

Tuition and fees deduction

The tuition and fees deduction is available for all levels of post-secondary education, and the cost of one or more courses can qualify. The annual deduction limit is $4,000 for joint filers whose MAGI is $130,000 or less and other taxpayers whose MAGI is $65,000 or less. The deduction limit drops to $2,000 for couples whose MAGI exceeds $130,000 but is no more than $160,000, and other taxpayers whose MAGI exceeds $65,000 but is no more than $80,000.

Other education-related tax benefits

1. Scholarship and fellowship grants—generally tax-free if used to pay for tuition, required enrollment fees, books and other course materials, but taxable if used for room, board, research, travel or other expenses.
2. Student loan interest deduction of up to $2,500 per year.
3. Savings bonds used to pay for college—though income limits apply, interest is usually tax-free if bonds were purchased after 1989 by a taxpayer who, at time of purchase, was at least 24 years old.
4. Qualified tuition programs, also called 529 plans, used by many families to prepay or save for a child’s college education.

Taxpayers with qualifying children who are students up to age 24 may be able to claim a dependent exemption and the earned income tax credit.

If you have a child under age 17, the Child Tax Credit may save you money at tax-time. Here are some facts the IRS wants you to know about the credit.

1.  Amount:  The non-refundable Child Tax Credit may help reduce your federal income tax by up to $1,000 for each qualifying child you claim on your return.

2.  Qualifications:  For this credit, a qualifying child must pass seven tests:

a.  Age test:  The child must have been under age 17 at the end of 2012.

b.  Relationship test: The child must be your son, daughter, stepchild, foster child, brother, sister, stepbrother, or stepsister. A child may also be a descendant of any of these individuals, including your grandchild, niece or nephew. You would always treat an adopted child as your own child. An adopted child includes a child lawfully placed with you for legal adoption.

c.  Support test:  The child must not have provided more than half of their own support for the year.

d.  Dependent test:  You must claim the child as a dependent on your federal tax return.

e.  Joint return test:  The child cannot file a joint return for the year, unless the only reason they are filing is to claim a refund.

f.  Citizenship test:  The child must be aU.S. citizen,U.S. national or U.S. resident alien.

g.  Residence test:  In most cases, the child must have lived with you for more than half of 2012.

3.  Limitations:  The Child Tax Credit is subject to income limitations, and may be reduced or eliminated depending on your filing status and income.

4.  Additional Child Tax Credit:  If you qualify and get less than the full Child Tax Credit, you could receive a refund even if you owe no tax with the refundable Additional Child Tax Credit.

5.  Schedule 8812:  If you qualify to claim the Child Tax Credit make sure to check whether you must complete and attach the new Schedule 8812, Child Tax Credit, with your return. If you qualify to claim the Additional Child Tax Credit, you must complete and attach Schedule 8812.

IRS Publication 972, Child Tax Credit, can provide you with more details.

US parents, your children may help you qualify for valuable tax benefits, such as certain credits and deductions. Here are eight benefits you shouldn’t miss when filing your US taxes this year.

1. Dependents. In most cases, you can claim a child as a dependent even if your child was born anytime in 2012.

2. Child Tax Credit. You may be able to claim the Child Tax Credit for each of your children that were under age 17 at the end of 2012. If you do not benefit from the full amount of the credit, you may be eligible for the Additional Child Tax Credit.

3. Child and Dependent Care Credit. You may be able to claim this credit if you paid someone to care for your child or children under age 13, so that you could work or look for work.

4. Earned Income Tax Credit. If you worked but earned less than $50,270 in 2012, you may qualify for EITC. If you have qualifying children, you may get up to $5,891 dollars extra back when you file a return and claim it.

5. Adoption Credit. You may be able to take a tax credit for certain expenses you incurred to adopt a child.

6. Higher education credits. If you paid higher education costs for yourself or another student who is an immediate family member, you may qualify for either the American Opportunity Credit or the Lifetime Learning Credit. Both credits may reduce the amount of tax you owe. If the American Opportunity Credit is more than the tax you owe, you could be eligible for a refund of up to $1,000.

7. Student loan interest. You may be able to deduct interest you paid on a qualified student loan, even if you do not itemize your deductions.

8. Self-employed health insurance deduction – If you were self-employed and paid for health insurance, you may be able to deduct premiums you paid to cover your child. It applies to children under age 27 at the end of the year, even if not your dependent.

While each individual tax return is unique, there are some tax rules that affect every person who files a federal income tax return. These rules involve dependents and exemptions. Here are some important facts about dependents and exemptions that the IRS has issued that will help you file your 2012 tax return.

1.Exemptions reduce taxable income.  There are two types of exemptions: personal exemptions and exemptions for dependents. You can deduct $3,800 for each exemption you claim on your 2012 tax return.

a.Personal exemptions.  You usually may claim one exemption for yourself on your tax return. You also can claim one for your spouse if you are married and file a joint return. If you and your spouse file separate returns, you may claim the exemption for your spouse only if he or she had no gross income, is not filing a joint return and was not the dependent of another taxpayer.

b.Exemptions for dependents.  Generally, you can claim an exemption for each of your dependents. A dependent is either your qualifying child or qualifying relative. If you are married, you may not claim your spouse as your dependent. You must list the Social Security Number of each dependent you claim on your return. For information about dependents who do not have Social Security numbers See IRS Publication 501.

2.Some people do not qualify as dependents.  While there are some exceptions, you generally may not claim a married person as a dependent if they file a joint return with their spouse.

3.Dependents may have to file.  If you can claim someone else as your dependent on your tax return, that person may still be required to file his or her own tax return. Whether they must file a return depends on several factors, including the amount of their gross income (both earned and unearned income), their marital status and any special taxes they owe.

4.Dependents can’t claim a personal exemption.  If you can claim another person as a dependent on your tax return, that person may not claim a personal exemption on his or her own tax return. This is true even if you do not actually claim that person as your dependent on your tax return. The fact that you could claim that person disqualifies them from claiming a personal exemption.

Remember that a person must meet several tests in order for you to claim them as your dependent. See IRS Publication 501 for the tests you will use to determine if you can claim a person as your dependent.

Most US Persons prefer to e-file these days and the tax software automatically chooses the best form for your particular situation. However, taxpayers who choose to file a paper tax return, here are some tips that will help choose the best tax form for their situation.

You can generally use the 1040EZ if:

Your taxable income is below $100,000;
Your filing status is single or married filing jointly;
You are not claiming any dependents;
Your income is only from wages, salaries, tips, unemployment compensation, Alaska Permanent Fund dividends, taxable scholarship and fellowship grants, and taxable interest of $1,500 or less.
You do not claim any adjustments to in-come, such as a deduction for IRA contributions or student loan interest.
You do not claim any credits other than the earned income credit.

If you can’t use Form 1040EZ, you may qualify to use the 1040A if:

Your taxable income is below $100,000;
Your income is only from:

Wages, salaries, and tips,
Interest,
Ordinary dividends (including Alaska Permanent Fund dividends),
Capital gain distributions,
IRA distributions,
Pensions and annuities,
Unemployment compensation,
Taxable social security and railroad retirement benefits, and
Taxable scholarship and fellowship grants.

If you receive a capital gain distribution that includes unrecaptured section 1250 gain, section 1202 gain, or collectibles (28%) gain, you cannot use Form 1040A. You must use Form 1040.

You claim certain tax credits;
Your adjustments to income are for only the following items:
Educator expenses.
IRA deduction.
Student loan interest deduction.
Tuition and fees.

If you cannot use the 1040EZ or the 1040A, you’ll probably need to file using the 1040.