Or you can get your taxes done right, with experts by your side with TurboTax Live Assisted.įile your own taxes with confidence using TurboTax. Let an expert do your taxes for you, start to finish with TurboTax Live Full Service. You also can only claim the American Opportunity Credit for the first four years of college for a particular student. If you claim the American Opportunity Credit for a student in a given year, you cannot also claim the Lifetime Learning Credit for the same student. The Lifetime Learning Credit, on the other hand, is nonrefundable, so you can claim a credit only up to the amount of the overall tax you owe. The American Opportunity Credit has a higher limit than the Lifetime Learning Credit, at $2,500, and the phase-out begins at higher MAGI levels as well.Īnother important distinction between the two credits is that up to 40 percent of the American Opportunity Credit is refundable, meaning you can actually receive money back if the amount of the credit exceeds your tax liability. As with the LLT, you can claim the American Opportunity Credit for yourself, your spouse or your dependents with qualifying educational expenses while pursuing an undergraduate degree. The American Opportunity Credit is another popular educational credit that you can claim using Form 8863. Just answer some simple questions about your education expenses and we’ll calculate exactly how much of the credit you qualify for. When you use TurboTax to prepare your taxes, we’ll handle all of these calculations for you. If no modification is necessary, your tentative LLT becomes the final amount of your credit. This section of the form determines whether or not your credit will be diminished by the amount of your MAGI. From there, skip ahead to Part IV of the form. Enter $10,000 or your actual expenses, whichever is smaller, then multiply this number by 20 percent. To compute the amount of your LLT, enter the name, Social Security number, and qualified expenses of each applicable student. If you use the form to calculate your LLT, you can skip Part I and start with Part II, which begins on line 9. You can claim both the Lifetime Learning Credit and the American Opportunity Credit in the same tax year but not for the same student or for the same qualified expenses.įorm 8863 is a two-page form used for computing educational tax credits. TurboTax Tip: You can also use Form 8863 to claim the American Opportunity Credit for up to $2,500 of qualifying educational expenses. The range for joint filers is doubled, with the credit phasing out between $160,000 and $180,000 of MAGI. With an MAGI of $90,000 or higher, you can't claim any credit as a single taxpayer. As of 2022, the LLC phases out between $80,000 and $90,000 of modified adjusted gross income for single taxpayers. Like many tax credits and deductions, the Lifetime Learning Credit phases out for higher-income taxpayers. You have to qualify according to Internal Revenue Service criteria before you can claim the LLC. Tax credits like the LLC provide a dollar-for-dollar reduction of your taxes owed, rather than the reduction in your taxable income that is offered by a tax deduction. As a credit, the LLC is more beneficial than a simple deduction. tax code that provides benefits to low- and middle-income taxpayers. The Lifetime Learning Credit is one of many provisions in the U.S. If not, your tentative LLC becomes the final amount of your credit.
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