American Opportunity Credit| Lifetime Learning
The American Opportunity Credit
The American Opportunity Credit, formally known as the Hope Learning Credit is a nonrefundable tax credit, not a scholarship or tax deduction. Tax credits are subtracted directly from the tax a family or student owes, while tax deductions are subtracted from taxable income. To receive the Hope tax credit, a family or student must file a federal tax return and owe taxes. Families and students that don't pay taxes cannot receive money from the Hope credit. If a family or student owes less in taxes than the amount of Hope tax credit they are eligible for, they can only receive a credit equal to the amount of taxes owed.
To claim this credit, the student must be enrolled at least half-time in a program leading to an undergraduate degree.
- The maximum yearly credit per eligible student is $2,500.
- There is no limit on how many family members can receive the credit.
For more information on eligibility and claiming of the American Opportunity credit, consult IRS publication 970, entitled Tax Benefits for Education.
Lifetime Learning Tax Credit
This credit is available for all years of postsecondary education and for courses (even a single course) to acquire or improve job skills.
- The Lifetime Learning credit can only be used for tuition and fees. The credit can be claimed for 20 percent of the amount you pay (see maximum limits below).
- A taxpayer may claim a tax credit for 20% of up to $10,000 in a combination of tuition and fees. This equates to a $2,000 tax credit in 2009.
- The amount of the credit begins to phase out if your AGI is between $50,000 and $60,000 for a single return and between $100,000 and $120,000 for a joint return.
For additional more detailed information please consult IRS Publication 970 titled Tax Benefits for Education.