The American Opportunity Credit is available for tax year 2017, 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: Form 1098-T
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 $66,000 in income and joint filers over $132,000 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.
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.