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Taxpayers can compare eligibility and benefits of two education credits

10/17/2019

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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


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The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
 
We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. 

Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs.   
 
We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at info@monarchaccountinggroup.com. 
 
For more free resources, such as Tax Rates, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com.

Monarch Accounting Group, Inc
145 Tower Drive, Suite 4
Burr Ridge, IL 60527

Phone (630) 320-3720



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Phone: (630) 320-3720

Monarch Accounting Group Inc
145 Tower Drive, Suite 4
Burr Ridge, IL 60527-7836
Email: Info@MonarchAccountingGroup.com


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  • Home
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