Education Credits (AOTC and LLC)
Education credits reduce tax for qualified education expenses. The American Opportunity Tax Credit (AOTC) provides up to $2,500 for the first 4 years of college (40% refundable). The Lifetime Learning Credit (LLC) provides up to $2,000 with no limit on years and is non-refundable. You cannot claim both for the same student in the same year.
Exam Tip
AOTC: $2,500 max, first 4 years, 40% refundable. LLC: $2,000 max, unlimited years, non-refundable. Cannot claim both for same student/year. Due diligence applies to AOTC.
What Are Education Credits?
Two credits help offset higher education costs: the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC).
AOTC vs. LLC Comparison
| Feature | AOTC | LLC |
|---|---|---|
| Maximum credit | $2,500 | $2,000 |
| Refundable? | 40% ($1,000) | No |
| Years available | First 4 years only | Unlimited |
| Enrollment | At least half-time | One or more courses |
| Felony drug conviction | Disqualifies | No effect |
| MAGI phase-out (single) | $80,000-$90,000 | $80,000-$90,000 |
| MAGI phase-out (MFJ) | $160,000-$180,000 | $160,000-$180,000 |
Qualified Expenses
| AOTC | LLC |
|---|---|
| Tuition and fees | Tuition and fees |
| Books and supplies | Books and supplies (if required) |
| NOT room and board | NOT room and board |
Exam Alert
Cannot claim AOTC and LLC for the SAME student in the same year. AOTC requires at least half-time enrollment in first 4 years. LLC has no year limit. Due diligence requirements apply to AOTC (Form 8867) -- $560 penalty. AOTC is partially refundable (40%); LLC is fully non-refundable.
Study This Term In
Buy on Amazon
Take courses on Udemy
Study resources on AchievableRelated Terms
Adjusted Gross Income (AGI)
Adjusted Gross Income (AGI) is gross income minus above-the-line deductions (adjustments to income). AGI is the key threshold used to determine eligibility for many tax credits, deductions, and phase-outs on Form 1040.
Due Diligence
Due diligence is the investigation period in a real estate transaction during which buyers thoroughly examine the property, review documents, and verify all aspects of the purchase before finalizing the deal.
Your AI study companion · 10 free interactions a day
Stay Updated
Get free exam tips and study guides delivered to your inbox.