Depending on the criteria, a student may use the
American Opportunity Credit of up to $2,500 or the Lifetime Learning Credit of up to $2,000.
In the past, there have been erroneous education claims, particularly with respect to the refundable portion of the
American Opportunity Credit.
American opportunity credit is a per-student, partially-refundable tax credit.
Tip #10: Take advantage of the
American Opportunity Credit (AOTC).
Among the others: the lifetime learning credit or the
American Opportunity Credit.
There are two types of credits: the
American Opportunity Credit, which is available through 2017 and is limited to the first four years of post-secondary education, and the Lifetime Learning Credit which provides credit for years after the first four years of post-secondary schooling and can be used for graduate studies.
Current refundable tax credits for individuals include the additional child credit, the earned income credit, the health coverage credit, and the
American opportunity credit.
The Lifetime Learning Credit and the
American Opportunity Credit, which is for degree or certificate programs only but allows up to $2,500 per student, per year, for the first four years of undergraduate school, cannot be claimed by the same person.
Students who attended school at least half time in 2012 may be eligible for the
American Opportunity Credit that can amount to $2500.
In contrast, several tax credits intended for low-income families -- such as the Child Tax Credit, the Earned Income Tax Credit and the
American Opportunity Credit -- were only extended for five years until 2017, something Greenstein described as "appalling.
Education credits such as the
American Opportunity credit cover the first $2,000 of tuition and related costs and 25 percent of the next $2,000 of expenses.
Therefore, the
American Opportunity credit remains the primary tax credit available for higher education in 2011 and 2012.
