American Opportunity Tax Credit (AOC)
- What is the American Opportunity Credit?
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?
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?
Generally,a taxpayer whose modified adjusted gross income is$80,000 or less ($160,000 or less for joint filers) can claim thecredit for the qualified expenses of an eligible student. The credit is reducedif 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) cannotclaim thecredit.
To be eligible for AOC, the student must:
See AlsoHow do education tax credits work and who qualifies?Education Tax Credits – Get It BackAmerican Opportunity Tax Credit (AOTC): Definition and BenefitsCompliance | Earned Income Tax Credit- 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?
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?
Check IRS Publication 970.
- What form do I use to claim the American Opportunity Tax Credit?
Use Form 8863 from IRS website.
Life Team Learning Credit (LLC)
- What is Lifetime Learning Tax Credit?
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?
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?
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 aneligible 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?
Form 8863 from the IRS website,
- Where do I find more information for the Lifetime Learning Tax Credit?
From IRS Publication 970.
- What are the qualified expenses for the Lifetime Learning credit?
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.
Tuition and Fees
- What is a Tuition and Fees Deduction and when should I use this?
The tuition and fees deduction is for taxpayers who cannot take the American Opportunity or Lifetime Learning credit because their income is too high. To learn more about the tuition & fees deduction, please seeIRS Form 8917.
Educational Credits - AOTC & LLC
- How can I or my parents claim a Tax Credit?
To be eligible to claim the AOTC or the lifetime learning credit (LLC), the law requires a taxpayer (or a dependent) to have received Form 1098-T, Tuition Statement, from an eligible educational institution, whether domestic or foreign.
- Can I claim AOTC or LLC without a valid TIN?
You may not claim the tax credit unless you, your spouse (if you are filing a joint return) and the qualifying student have a valid taxpayer identification number (TIN) issued or applied for on or before the due date of thetax return (including extensions).
- How do I know if I should claim the AOTC or the LLC?
If you have any questions about the differences between the two and what is best for you.Please refer to Compare Education Creditsonthe IRS website.
Student Loans
- When I use student loans to pay tuition expenses, do I qualify to claim tax credit?
Yes, student loans are considered your personal funds, they are not considered financial aid or scholarship money. You are still qualified to claim the tax credit if you meet the requirement.
Scholarship or fellowship
- What happens if my Financial Aid or scholarship money is more than the tuition expenses?
Any financial aid or scholarship money not used to pay for tuition or education expenses is taxable income; you may have to report it as income when you file a tax return.
- Is a scholarship or fellowship taxable?
A scholarship or fellowship is subject to tax if it exceeds the tuition charges and required book fees. Read more in IRS publication 970.
Getting Help
- Where can I get help at the University of Washington when I have a tax issue with the IRS?
UW law school has a Federal Tax Clinic which was established in 2000 to assist low-income individuals throughout Western Washington resolve disputes with the Internal Revenue Service. The federally-funded clinic offers this assistance as a public service and as a means of training law students in tax practice.
For more information, please visit theLaw school website.
- Which office should I contact if I have questions regarding American Opportunity and Lifetime Learning Tax Credit, scholarship or fellowship taxes?
Contact Student Fiscal Services by calling 206-221-2609, or send an email to: taxquest@uw.eduwith your student number.
