Category: Education: Tax Breaks Related to School
What are the differences between the American Opportunity Credit and the Lifetime Learning Credit?
There are two tax credits available to persons who pay expenses for higher (postsecondary) education.
* The American Opportunity Credit, and
* The Lifetime Learning Credit
For each student you can choose only one of the credits for any one year. For example, if you choose to take the American Opportunity Credit for a child on your 2016 tax return then you cannot also claim the Lifetime Learning Credit for that same child for 2016.
If you pay qualified education expenses for more than one student in the same year, you can choose to take the American Opportunity and the Lifetime Learning Credits on a per-student, per-year basis. This means that, for example, you can claim the American Opportunity Credit for one student and the Lifetime Learning Credit for another student in the same year.
|American Opportunity Credit||Lifetime Learning Credit|
|Maximum credit||Up to $2,500 credit per eligible student||Up to $2,000 credit per return|
|Limit on modified adjusted gross income (MAGI)||$180,000 if married filling jointly; |
$90,000 if single, head of household, or qualifying widow(er)
|$130,000 if married filling jointly; |
$65,000 if single, head of household, or qualifying widow(er)
|Refundable or nonrefundable||40% of credit may be refundable||Credit limited to the amount of tax you must pay on your taxable income|
|Number of years of post-secondary education||Available ONLY for the first 4 years of postsecondary education||Available for all years of postsecondary education and for courses to acquire or improve job skills|
|Number of tax years credit available||Available ONLY for 4 tax years per eligible student||Available for an unlimited number of years|
|Type of degree required||Student must be pursuing an undergraduate degree or other recognized education credential||Student does not need to be pursuing a degree or other recognized education credential|
|Number of courses||Student must be enrolled at least half time for at least one academic period beginning during the tax year||Available for one or more courses|
|Felony drug conviction||No felony drug convictions on student's records||Felony drug convictions are permitted|
|Qualified expenses||Tuition and required enrollment fees. Course-related books, supplies, and equipment do not need to be purchased from the institution in order to qualify.||Tuition and required enrollment fees, including amounts required to be paid to the institution for course-related books, supplies, and equipment.|
|Payments for academic periods||Payments made in 2016 for academic periods beginning in 2016 and in the first 3 months of 2017|
Who can claim an Education Credit?
You may be able to claim an education credit if you, your spouse, or a dependent you claim on your tax return was a student enrolled at or attending an eligible educational institution. The credits are based on the amount of qualified education expenses paid for the student in 2016 for academic periods beginning in 2016 and in the first 3 months of 2017. (For example, if you paid $1,500 in December 2016 for qualified tuition for the spring 2017 semester beginning in January 2017, you may be able to use that $1,500 in figuring your 2016 education credit(s).)
For you to claim an American Opportunity Credit for your dependent's expenses, you must also claim an exemption for your dependent.
For more information, please see IRS publication 970.