{"id":64349,"date":"2024-05-17T14:11:34","date_gmt":"2024-05-17T19:11:34","guid":{"rendered":"https:\/\/resource-center.hrblock.com\/?p=64349"},"modified":"2025-01-30T11:51:10","modified_gmt":"2025-01-30T17:51:10","slug":"american-opportunity-vs-lifetime-learning-credit","status":"publish","type":"post","link":"https:\/\/hrbcomlnp.hrblock.com\/tax-center\/filing\/american-opportunity-vs-lifetime-learning-credit\/","title":{"rendered":"American Opportunity Credit vs. Lifetime Learning Credit"},"content":{"rendered":"
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Anyone paying for college knows it\u2019s expensive. If you\u2019re like most students and families, any options to make college more affordable are welcome \u2014 including income tax breaks. Did you know you could lower your tax based on qualifying education-related expenses? If you paid for postsecondary education this tax year, two valuable education credits \u2014 the American Opportunity Tax Credit and the Lifetime Learning Tax Credit \u2014 could reduce your tax bill. We\u2019ll define the details of each and then explain how these education tax credits can reduce your taxable income.<\/p>\n\n\n\n

<\/a>First, what is an education tax credit?<\/h2>\n\n\n\n

An education tax credit is a tax benefit given by the Internal Revenue Service (IRS) to help offset the costs of higher education expenses by reducing your taxes. And if the credit is more than what you owe, you could receive a tax refund. This means extra money to pocket, which is especially great news if you\u2019re on a fixed or limited budget.<\/p>\n\n\n\n

There are two education tax credits available: the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). We\u2019ll define each below and then explain the difference between the Lifetime Learning Credit vs. American Opportunity Credit.<\/p>\n\n\n\n

<\/a>What is the American Opportunity Credit?<\/h2>\n\n\n\n

The American Opportunity Tax Credit<\/a> (commonly abbreviated to AOTC or AOC) is a partially refundable income tax credit. That means if you\u2019ve offset the taxes you owe and there\u2019s enough credit left over, you could get money back as a tax refund. For this credit, 40% of the credit is refundable (limited to $1,000 per eligible student).<\/p>\n\n\n\n

<\/a>How much is it worth?<\/h3>\n\n\n\n

For taxpaying undergraduate students or their parents, the American Opportunity Tax Credit allows a maximum credit of $2,500 (100% of the first $2,000 of qualified expenses and 25% of the next $2,000 of qualified expenses) for certain school-related expenses at an eligible educational institution.<\/p>\n\n\n\n

<\/a>What\u2019s included?<\/h3>\n\n\n\n

Qualified education expenses for the AOC include:<\/p>\n\n\n\n