- What is the American Opportunity Credit?
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The American Opportunity Tax Credit is a credit for qualified education expenses paid for an eligible student for the first four years of higher education.
- What is the amount of the American Opportunity Credit?
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The maximum credit per student is $2500. (100% of the first $2,000 and 25% of the next $2,000 of qualified education expenses). Also, 40% of the credit (up to $1000) is refundable.
- How do I qualify for the American Opportunity Credit?
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Generally, a taxpayer whose modified adjusted gross income is $80,000 or less ($160,000 or less for joint filers) can claim the credit for the qualified expenses of an eligible student. The credit is reduced if a taxpayer’s modified adjusted gross income exceeds those amounts. A taxpayer whose modified adjusted gross income is greater than $90,000 ($180,000 for joint filers) cannot claim the credit.
To be eligible for AOC, the student must:
- be enrolled in a program leading toward a degree, certificate or other recognized post-secondary educational credential.
- not have completed the first four years of post-secondary education as of the beginning of the taxable year.
- for at least one academic period is carrying at least ½ of the normal full-time workload for the course of study the student is pursuing.
- not been convicted of a felony drug offense.
- What expenses are eligible for the American Opportunity credit?
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Qualified education expenses include amounts spent tuition and required fees and materials for course enrollment. This includes books, supplies, and equipment needed for a course of study.
The following expenses do not qualify for any tax credit.
Room and board. Transportation. Insurance. Medical expenses. Student fees unless required as a condition of enrollment or attendance. Same expenses paid with tax-free educational assistance. Same expenses used for any other tax deduction, credit or educational benefit.
- Where do I find more information about the American Opportunity Credit?
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Check IRS Publication 970.
- What form do I use to claim the American Opportunity Tax Credit?
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Use Form 8863 from IRS website.
- What is Lifetime Learning Tax Credit?
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The Lifetime Learning credit is a tax credit available to students in all years of their postsecondary education and for courses to acquire or improve job skills.
- What is the amount for Lifetime Learning Tax Credit?
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It is worth up to $2,000 per tax return. (The amount of the credit is 20 percent of the first $10,000 of qualified education expenses or a maximum of $2,000 per return). There is no limit to the amount of years you can claim it.
- Who qualifies for the Lifetime Learning Tax Credit?
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To claim the LLC, you must meet all three of the following:
- You, your dependent or a third party pay qualified education expenses for higher education.
- You, your dependent or a third party pay the education expenses for an eligible student enrolled at an eligible educational institution.
- The eligible student is yourself, your spouse or a dependent you listed on your tax return.
To be eligible for LLC, the student must:
- Be enrolled or taking courses at an eligible educational institution.
- Be taking higher education course or courses to get a degree or other recognized education credential or to get or improve job skills.
- Be enrolled for at least one academic period* beginning in the tax year.
- What form do I use to claim the Lifetime Learning Tax Credit?
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Form 8863 from the IRS website,
- Where do I find more information for the Lifetime Learning Tax Credit?
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From IRS Publication 970.
- What are the qualified expenses for the Lifetime Learning credit?
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Qualified education expenses include only amounts for books, supplies and equipment required to be paid to the institution as a condition of enrollment or attendance.