The American Opportunity Credit and Lifetime Learning Credit may help offset the cost of higher education for you, your spouse and your dependents.
The amount of these credits are based on the qualified education expenses, such as college or vocational school tuition and enrollment fees, that you paid during the year and may be limited by your modified adjusted gross income. Items such as insurance, personal living expenses, and room and board are not considered qualified education expenses.
When can the American Opportunity Tax Credit be claimed?
The American Opportunity Tax Credit can be claimed for tuition and certain fees you pay for higher education. You can only claim this credit for a maximum of four years.
When can the Lifetime Learning Credit be claimed?
The Lifetime Learning Credit, which is up to a $2,000 tax credit per tax return, can be claimed by those taking undergraduate, graduate or professional degree courses. There is no limit to the number of years you can take this credit.
Are you paying Student Loan interest?
You may be able to deduct up to $2,500 from your income per tax return. Student Loan interest may be deducted even while your student is in school if you are paying the interest immediately rather than deferring the payments.
You cannot claim the American Opportunity Tax Credit and Lifetime Learning Credit for the same student in the same year. You will want to choose the credit or deduction that provides the greatest benefit that you are eligible for. However, you can claim the Student Interest Loan deduction and one of these other benefits simultaneously.