Federal Education Tax Benefits

American Opportunity Credit

The American Opportunity Credit is available for tax year 2014, which allows a maximum tax credit of $2,500 (100 percent of the first $2,000 and 25 percent of the next $2,000). The credit is available for the first four years of postsecondary education and 40 percent of the credit (up to $1,000) is refundable to many taxpayers.

Eligibility is determined by income if filing as single, head of household or qualifying widow. The maximum limit using Marginal Adjusted Gross Income (MAGI) is $90,000. The limit of the tax credit before the phase out starts is $80,000. The MAGI limit for taxpayers married filing joint is $180,000. The phase out of the tax credit for married filing joint taxpayers begins at $160,000.   

Lifetime Learning Credit

Adults returning to college and students attending less than half time are eligible for a new lifetime learning tax credit. The credit is worth 20 percent of the first $10,000 of tuition and fees for the year 2014. 

Eligibility is determined at the same income levels as the Hope Scholarship. Single filers over $60,000 in income and joint filers over $120,000 are ineligible. Taxpayers filing married and separate are not eligible for the Lifetime Learning tax credit. 

The Lifetime Learning Credit may not be claimed during the same year as the Hope Scholarship Credit.


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