Federal Education Tax Benefits

  • American Opportunity Credit

    The American Opportunity Credit is available for tax year 2016, which allows a maximum tax credit of $2,500 (100 percent of the first $2,000 and 25 percent of the next $2,000). The credit is available for the first four years of post-secondary education and 40 percent of the credit (up to $1,000) is refundable to many taxpayers.

    Eligibility is determined by income if filing as single, head of household or qualifying widow. The maximum limit using Marginal Adjusted Gross Income (MAGI) is $90,000. The limit of the tax credit before the phase out starts is $80,000. The MAGI limit for married taxpayers filing jointly is $180,000. The phase out of the tax credit for married filing jointly taxpayers begins at $160,000.   

    For more information, view the following: 

    Lifetime Learning Credit

    Lifetime Learning Credit allows you to take a tax credit if you do not qualify for the American Opportunity Credit. Adults returning to college and students attending less than half time are eligible for the tax credit. The tax credit allows for a maximum of 20 percent, $2,000 ($10,000 x .20),  of qualified expenses. 

    Eligibility is determined at the same income levels as the Hope Scholarship. Single filers over $60,000 in income and joint filers over $120,000 are ineligible. Taxpayers filing married and separate are not eligible for the Lifetime Learning tax credit. 

    The Lifetime Learning Credit may not be claimed during the same year as the Hope Scholarship Credit.

    Comparison Chart

    If you have more than one student eligible for the American Opportunity Credit, you must claim the same credit for all eligible students. You cannot claim both the American Opportunity Credit and the Lifetime Learning Credit on the same tax return for one student. However, you can claim both the American Opportunity Credit and the Lifetime Learning Credit on the same return but not for the same student.



    American Opportunity CreditLifetime Learning Credit 
    Maximum credit Maximum credit up to $2,500 credit pereligible student.Up to $2,000 ($4,000 if a student in a Midwestern disaster area) credit perreturn .
    Limit on modified adjusted gross income (MAGI)$180,000 if married filling jointly adjusted gross $90,000 if single, head of household, or qualifying widow(er).$120,000 if married filling jointly; $60,000 if single, head of household, or   qualifying widow(er).
    Refundable or nonrefundable40% of credit may be refundable; the rest is nonrefundable. 
    Number of years of postsecondary educationAvailable only for the first 4 years of postsecondary education.Available for all years of postsecondary and for courses to acquire or improve job skills. 
    Number of tax years credit availableAvailable only for 4 tax years per (including any year(s)  Hope Scholarship Credit was claimed.)Available for an unlimited number of years.
    Type of degree requiredStudent must be pursuing an undergraduate degree or other recognized education credential.Student does not need to be pursuing a degree or other recognized education credentials. 
    Number of coursesStudent must be enrolled at least half time for at least one academic period  beginning during the year. Available for one or more courses. 
    Felony drug convictionNo felony drug convictions on student’s records.Felony drug convictions are permitted.
    Qualified expensesTuition and required enrollment fees.  Course-related books, supplies and equipment do not need to be purchased from the institution to qualify. 
    Payments for academic periodsPayments made in 2015 for academic periods beginning in 2015 and in the first 3 months of 2016. Payments made in 2015 for academic periods beginning in 2015 and in the first 3 months of 2016. 
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