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Higher Education and Your Taxes

American Opportunity Tax Credit

Taxpayers may be eligible to claim a nonrefundable American Opportunity credit against their federal income taxes. The credit may be claimed for the tuition and expenses of each student in a post-secondary education program and enrolled in a degree program. The American Opportunity tax credit is worth up to $2,500 on the first $4,000 of qualifying educational expenses, which includes course material and tuition. The credit is allowed for the first four years of post-secondary education. The amount of the tax credit is:

  • 100% of the first $2,000 in qualifying educational expenses
  •  25% of the next $2,000 in qualifying expense   

Lifetime Learning Tax Credit

The Lifetime Learning credit is for anyone who takes college classes. It is a tax credit of 20% of tuition expenses, the maximum being $2,000 in tax credits on the first $10,000 of college tuition expense. Those that can claim Lifetime Learning credits on their tax return are either enrolled at an eligible educational institution or are responsible for paying for college expenses for themselves, their spouse or their dependents.

For more information on the American Opportunity and Lifetime Learning tax credits, go to:

IRS: Education Credits
Earned Income Tax Credit (EITC)

Why is 1098-T important?

IRS flyer: Students and Parents – Why Form 1098-T Is Important to You