Uncle Sam is helping online students with a ho
st of tax credits—including an education tax credit
as part of the federal stimulus program.
These popular tax credits save you money on online education tuition and fees
by cutting the amount of income tax you owe.
As you work through your 1040 or 1040EZ form and calculate your adjusted gross income, you will see what your tax is based on the chart the IRS provides. You can subtract your tax credit directly from your tax bill, reducing the amount you must pay the government.
For example, if you look up your adjusted gross income in the tax chart and find that you owe $4,000, and you qualify for $2,500 in education tax credits, you can subtract $2,500 from $4,000—meaning you will only owe the government the difference ($1,500).