Source: Educational Benefit Guidance as provided by IRS Tax Tip 2019-145, October 17, 2019.

Important: Not all scenarios and enrollments at PC Professor may qualify for tax credits and/or deductions. You are strongly encouraged to check with IRS in advance and to thoroughly discuss these and/or any other educational tax-savings with your CPA prior to registration at our school.

Taxpayers can compare eligibility and benefits of two education credits

There are two education credits that can help taxpayers with higher education costs: the American opportunity tax credit and the lifetime learning credit. There are several differences and some similarities between them. Taxpayers can claim both benefits on the same return, but not for the same student or same qualified expenses. Here’s a comparison of these two credits:

What is the maximum credit or benefit?

American opportunity tax credit: Up to $2,5000 credit per eligible student

Lifetime learning credit: Up to $2,000 credit per tax return

Is it refundable or non-refundable?

American opportunity credit: Refundable for up to 40 percent of credit

Lifetime learning credit: Not refundable

Can taxpayers claim the credit if they file with the filing status married filing separately?

Both credits: No

What is the limit on maximum adjusted gross income for the other filing statuses?

American opportunity credit: Married filing joint: $180,000 Other statuses: $90,000

Lifetime learning credit: Married filing joint: $136,000 Other statuses: $68,000

Can a taxpayer claim credit if they be claimed as a dependent on someone else’s tax return?

Both credits: No

Must the taxpayer or their spouse be a US citizen or resident alien?

Both credits: Yes, unless nonresident alien is treated as resident alien for tax purposes.

What is the number of tax years for which the credit is available?

American opportunity credit: Four tax years per eligible student

Lifetime learning credit: Unlimited

What type of program is required?

American opportunity credit: Student must be pursuing degree or other recognized education credential

Lifetime learning credit: Student doesn’t need to be pursuing degree or other recognized education credential

What is the number of courses for which the credit is available?

American opportunity credit: Must be enrolled at least half time for at least one academic period in 2019

Lifetime learning credit: Available for one or more courses

What qualified expenses does the credit cover?

American opportunity credit: Tuition, required enrollment fees, course materials

Lifetime learning credit: Tuition and fees required for enrollment and attendance

For whom can the taxpayer claim the credit?

Both credits: the taxpayer, their spouse, or a student they claim as a dependent on their tax return

Who must pay the qualified expenses?

Both credits: the taxpayer, their spouse, the student, or a third party

There are several differences and some similarities between the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). You can claim both benefits on the same return but not for the same student or same qualified expenses.

Education Credits Comparison

Criteria	AOTC	LLC
Maximum credit or benefit	Up to $2,500 credit per eligible student	Up to $2,000 credit per return
Refundable or nonrefundable	40% of credit	Not refundable
Limit on MAGI for married filing jointly	$180,000	$134,000
Limit on MAGI for single, head of household, or qualifying widow(er)	$90,000	$67,000
Can you file married filing separately?	No
Dependent status	Cannot claim credit if you are claimed as a dependent on someone else’s return
Must you or your spouse be a U.S. Citizen or Resident Alien?	Yes, unless nonresident alien is treated as resident alien for tax purposes (see Publication 519 for information on nonresident alien status)
Number of years of post-secondary education available	Only if student hasn’t completed 4 years of post secondary education before 2018	All years of post secondary education and for courses to acquire or improve job skills
Number of tax years credit available	4 tax years per eligible student including any years former Hope credit claimed	Unlimited
Type of program required	Student must be pursuing a degree or other recognized education credential	Student does not need to be pursuing a degree or other recognized education credential
Number of courses	Student must be enrolled at least half time for at least one academic period	Available for one or more courses
Felony drug conviction	No felony drug convictions	Does not apply
Qualified expenses	Tuition, required enrollment fees and course materials needed for course of study	Tuition and fees required for enrollment or attendance
For whom can you claim the benefit?	You Your spouse Student you claim as a dependent on your return	You Your spouse Student you claim as a dependent on your return
Who must pay the qualified expenses?	You or your spouse Student Third party	You or your spouse Student Third party

Do I need to claim the educational credit on a schedule or form?	Yes, Form 8863, Education Credits	Yes, Form 8863, Education Credits