Disclaimer: General information, not tax advice. Credit amounts, income limits, and rules change and have phase-outs. Confirm current details in IRS Publication 970 or with a tax professional.
Two federal education tax credits can reduce the tax you owe for qualified education expenses: the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). They cannot generally be claimed for the same student and expense in the same year.
American Opportunity Tax Credit (AOTC)
- Generally for the first four years of higher education.
- Requires at least half-time enrollment and a degree or certificate program.
- Has a per-student credit structure set by the IRS, with income phase-outs.
- Part of the credit can be refundable under IRS rules, subject to limits.
Lifetime Learning Credit (LLC)
- Available for a broader range of students, including part-time and graduate study.
- Generally one credit per return, not per student.
- Also has income phase-outs set by the IRS.
Coordination With 529 Plans
The same qualified expenses generally cannot be used for both a 529 tax-free withdrawal and an education tax credit. Keep clear records. For the official rules, see IRS.gov and Publication 970.