American Opportunity and Lifetime Learning Credits Help Pay Education Costs
This year, there are two federal tax credits available to help Americans meet the costs of higher education. These credits, the American Opportunity Credit and the Lifetime Learning Credit, are available to both individuals and their dependents.
Restrictions do apply, of course. To qualify for either credit, you must pay postsecondary tuition and fees for yourself, your spouse, or your dependent. Further, only one of these credits can be claimed in any tax year per person ‐ but not both. For instance, you cannot claim the American Opportunity Credit to pay for part of a child's tuition charges and then claim the Lifetime Learning Credit for $2,000 more against school costs. And, the credit can be claimed by only the parent or the student, but not by both. Note that if the student is claimed as a dependent, the student cannot claim the credit.
However, if you pay college expenses for two or more students in the same year, you can choose to take credits on a per‐student, per‐year basis. You can claim the American Opportunity Credit for one child and the Lifetime Learning Credit for another.
Specifics regarding the American Opportunity Credit as published by the IRS:
- The credit can be up to $2,500 per eligible student.
- It is available for the first four years of post—secondary education.
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Forty percent of the credit is refundable, which means that you may be able to receive up to $1,000, even if you owe no taxes.
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The student must be pursuing an undergraduate degree or other recognized educational credential.
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The student must be enrolled at least halftime for at least one academic period.
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Qualified expenses include tuition and fees, coursed related books supplies and equipment.
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The full credit is generally available to eligible taxpayers who make less than $80,000 or $160,000 for married couples filing a joint return.
