What are education tax credits?

​Education tax credits reduce the amount of tax you owe on your federal return. There are two main credits available:

1. American Opportunity Tax Credit (AOTC)
2. Lifetime Learning Credit (LLC)

 
American Opportunity Tax Credit
The AOTC offers up to $2,500 per student per year for qualified education expenses during the first four years of post-secondary education. Up to $1,000 of the credit may be refundable, even if you owe no tax.
 
Lifetime Learning Credit
The LLC offers up to $2,000 per tax return (not per student) for qualified education expenses. It’s available for any level of post-secondary education, including graduate courses and part-time study. Unlike the AOTC, this credit is non-refundable.
 
Qualifications for Credits

• You must pay qualified education expenses for yourself, your spouse, or a dependent.
• The student must be enrolled at an eligible educational institution.
• Income limits:
  • To claim the full credit, your modified adjusted gross income (MAGI) must be $80,000 or less ($160,000 or less for married filing jointly).
  • You receive a reduced amount of the credit if your MAGI is over $80,000 but less than $90,000 (over $160,000 but less than $180,000 for married filing jointly).
  • You cannot claim the credit if your MAGI is over $90,000 ($180,000 for joint filers).

 
Qualifying Expenses

• Tuition and required fees
• Course materials (books, supplies, equipment) for AOTC
• Some additional fees if required for enrollment

 
Room and board, insurance, and transportation do not count.
 
You cannot claim both credit types for the same student in a single tax year.