College students in the United States may be eligible for several tax credits to help offset the costs of higher education. The two main tax credits available are the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). Here’s a summary of each:
American Opportunity Tax Credit (AOTC)
- Eligibility:
- Available for the first four years of post-secondary education.
- Student must be pursuing a degree or other recognized education credential.
- Enrolled at least half-time for at least one academic period beginning in the tax year.
- No felony drug convictions.
- Credit Amount:
- Up to $2,500 per eligible student.
- 100% of the first $2,000 of qualified education expenses and 25% of the next $2,000.
- Qualified Expenses:
- Tuition, fees, and course materials needed for enrollment or attendance.
- Refundability:
- 40% of the credit is refundable, meaning you can receive up to $1,000 even if you owe no tax.
Lifetime Learning Credit (LLC)
- Eligibility:
- Available for all years of post-secondary education and for courses to acquire or improve job skills.
- Student does not need to be pursuing a degree or other recognized education credential.
- Available for an unlimited number of tax years.
- Credit Amount:
- Up to $2,000 per tax return.
- 20% of the first $10,000 of qualified education expenses.
- Qualified Expenses:
- Tuition and fees required for enrollment or attendance (books and supplies are included only if required to be paid to the institution).
- Refundability:
- Non-refundable, meaning it can only reduce your tax to zero, and any excess is not refunded.
Income Limits
- AOTC:
- For 2024, the credit phases out for modified adjusted gross incomes (MAGI) between $80,000 and $90,000 for single filers and between $160,000 and $180,000 for joint filers.
- LLC:
- For 2024, the credit phases out for MAGI between $59,000 and $69,000 for single filers and between $118,000 and $138,000 for joint filers.
How to Claim
- You must complete Form 8863 and attach it to your tax return to claim these credits.
- Be sure to keep records of tuition payments, fee statements, and other relevant documents to support your claim.
Additional Information
- Both credits cannot be claimed for the same student in the same year.
- You may also be eligible for deductions for student loan interest and other education-related expenses.
For more detailed information and to ensure you qualify, you can visit the IRS website on education credits or consult a tax professional.
