Education Tax Credit

Education Tax Credit

 The American Opportunity Tax Credit (“AOTC”) and the Lifetime Learning Tax credits are two current ways that taxpayers can help with the cost of higher education. Only one of the education credits can be claimed per qualifying student.

American Opportunity Tax Credit (AOTC)

The American Opportunity Tax Credit is available for eligible students during their first four years of post-secondary education. Key features of American Opportunity Tax Credit include:

• Can claim up to $2,500 per eligible student
• Up to 40% (maximum of $1,000) may be refundable
• Qualified expenses cannot exceed $4,000 per eligible student

Lifetime Learning Credit

The Lifetime Learning Credit is designed to be used for undergraduate, graduate, and professional degree students, and individuals taking courses to acquire or improve job skills. Key features of the Lifetime Learning Credit include:

• Up to $2,000 is eligible per tax return
• Equal to 20% of the first $10,000 of qualified education expenses.
• The Lifetime Learning credit is non-refundable.

Income Limits:

For current eligibility, your modified adjusted gross income must be less than:

• $90,000 for single filing and most other individual filers
• $180,000 for married filing jointly

Qualified Education Expenses

Qualified expenses include:

• Tuition
• Required enrollment fees
• Required books, supplies, and course materials (AOTC rules are broader than LLC for course materials)

If you would like to learn more about the American opportunity & lifetime learning tax credits set up a consultation, call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730.

The above information is of a general nature only and should not be relied upon for specific situations.