Wondering what education tax credits you can take on your tax return?
If you, your spouse, or one of your dependents is enrolled in a higher education program, you have probably asked yourself, “What education credits can I take on my tax return?” Tuition costs are not cheap, so you want to take advantage of every tax break for which you are eligible.
There are two education tax credits available: the American Opportunity Tax Credit and the Lifetime Learning Credit.
Both of these credits have different eligibility requirements. In addition, you can only take one of them per tax return even if you qualify for both. These are some of the basic differences between these two tax credits.
American Opportunity Tax Credit
- Maximum credit of $2,500 per student
- 40% of the credit is refundable if student owes less than $2,500 on tax return
- Only applies for the first four years of higher learning
- Only applies to students pursuing a recognized degree
- Student must be enrolled at least half-time
- Maximum income for single, head of household to receive full benefit is $90,000
- Those with felony drug charges as of the end of 2013 are not eligible
Lifetime Learning Credit
- Maximum credit of 2,000 per tax return
- Credit is not refundable if student owes less than $2,000 on tax return
- Applies to students taking undergraduate or graduate classes regardless of prior education
- Student does not need to be pursuing a degree to qualify
- Applies to students taking at least one course
- Maximum income for single, head of household to receive full benefit is $62,000
To qualify for either of these tax credits, you must be paying qualified educational expenses, the student must be enrolled at an eligible educational institution, and the student must be yourself, your spouse, or a dependent listed on your tax return.
If I am paying tuition, it is worthwhile to find out what education credits can I take on my tax return.