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What education tax credits are available?

by TurboTax Updated 3 months ago

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 years4 years per studentUnlimited
UseFirst 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 qualifiesAt 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) limitsMust be below $90,000 or $180,000 if Married Filing JointlyMust be below $90,000 or $180,000 if Married Filing Jointly
Maximum credit amount$2,500$2,000
Credit typeRefundable up to 40% of creditNonrefundable

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