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One thing that’s been slowly happening since Barack Obama became president is a steady overhauling of college financial aid. The most recent is the introduction of the American Opportunity Tax Credit. At the same time, educational tax credits are not new. They’ve been around for nearly a decade. That doesn’t mean Obama hasn’t worked them over. Those earning college degrees online and at a traditional college would do well to understand all these provisions.

Actually, there already was something in place. It’s called the Lifetime Learning Credit, and it came into being back in 2001, when the original Hope credit was introduced. This credit may not offer as much bang for the dollar, but it does cover a wider field of candidates.

The Lifetime Learning Credit is for students who are in their third year of college, taking post-graduate courses or even going part time with as little as one class. Another key difference is a household can have multiple Learning Credits due to having more than one child in college.

Since Obama, the amount credited has been increased. At the moment it gives a household as much as a 20% off for the first $10,000 spent, i.e., up to $2,000. Unlike other credits, it can be applied to a broader number of expenses though, such as not only tuition, text books and fees, but other education-related items such as a laptop. It can even be applied to travel, if you can prove to the IRS that the travel is education-related.

One important point is there’s what the IRS calls a “phase out” point. The Lifetime credit can only be applied by a single individual who earn less than $60,000 adjusted gross income or a pair filing a joint return who earn under $120,000. Remember this is the IRS, not the Board of Education, and the credit is obtained when filing one’s income taxes, not when you fill out a FASFA form for a Pell Grant.

Other provisos include an individual can’t get both an Opportunity and a Lifetime credit; just one or the other. Yet, as said before, if a parent has more than one dependent in school, the parent can get credits for all of them if they meet the other criteria.

Probably the most important point is this is a tax credit, not a deduction. This means you apply for the Lifetime after you get a final total, not subtract it from the expenses. The facts are, the IRS is very particular about how this matter is handled, and will throw a tax form out, even put a claim against the taxpayer, if everything isn’t done absolutely right. As such, it’s definitely a good idea to have the form reviewed by a tax consultant before filing.

If you do it all properly though, you could not only end up with a better education, but either a whopping tax credit, if not an actual refund, from the IRS no less. Now that’s making one’s education pay for itself. Working towards your online degree education and through campus-based attendance mean improving your career potential. While college grants and scholarships will definitely be of assistance, help yourself further by learning all about this credit. There is much more information about online scholarships on the internet.