What is Education Tax Credits (AOTC and LLC)?
Definition Two credits help offset the cost of higher education. The American Opportunity Tax Credit applies to the first four years of undergraduate study, is partly refundable, and is claimed per student, while the Lifetime Learning Credit covers a broader range of coursework, is nonrefundable, and is claimed per return. Both phase out at higher incomes and cannot be claimed for the same expenses at once.
Choosing the right credit and coordinating it with 529 plans and scholarships can save families thousands over the course of a student's education.