Education tax credits can help you with higher education costs by reducing the amount of tax you owe. There are two credits available, the American Opportunity Tax Credit and the Lifetime Learning Credit. We check both of them for you by asking questions in the Deductions & Credits part of your return.
You can use the American Opportunity Tax Credit (AOTC) for the first four years of college when working towards a degree.
- Maximum credit is $2,500 per eligible student
- Must be enrolled at least half-time for at least one semester during the tax year at an eligible educational institution
- Up to $1,000 can be refunded to you
There's no limit on the number of years you can use the Lifetime Learning Credit for undergraduate, graduate and professional degree courses, including ones to improve job skills.
- Maximum credit is $2,000 per tax return
- Can be used when you're only taking one class at an eligible educational institution
- You don't need to be working toward a degree
- None of the credit is refundable
This table provides more details on the two credits:
| American Opportunity Tax Credit (AOTC) | Lifetime Learning Credit | |
|---|---|---|
| Available years | 4 years per student | Unlimited |
| Use | First 4 years of postsecondary school Pursuing an undergraduate degree or educational credential | All years of postsecondary education and for courses to get or improve job skills All educational courses, including those not in pursuit of a degree |
| What qualifies | At least half time enrollment Tuition, required enrollment fees, and course materials needed for course of studies | One or more courses Tuition and fees required for enrollment or attendance |
| You cannot: | Be claimed as a dependent on someone else's return File Married Filing Separately Be a nonresident alien Have a felony drug conviction | Be claimed as a dependent on someone else's return |
| Modified adjusted gross income (MAGI) limits | Must be below $90,000 or $180,000 if Married Filing Jointly | Must be below $90,000 or $180,000 if Married Filing Jointly |
| Maximum credit amount | $2,500 | $2,000 |
| Credit type | Refundable up to 40% of credit | Nonrefundable |
