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What's the difference between the American Opportunity and Lifetime Learning education credits?

Answer

Both cut college-tax bills, but they fit different situations. The American Opportunity Tax Credit (AOTC) is worth up to $2,500 per student per year, 40% of it refundable, but only for the first four years of an undergraduate degree, for students enrolled at least half-time. The Lifetime Learning Credit (LLC) is worth up to $2,000 per tax return (not per student), nonrefundable, with no limit on the number of years and no degree or enrollment-level requirement, so it covers grad school, part-time classes, and skill courses. You can't claim both for the same student in the same year. AOTC phases out at modified AGI of $80,000–$90,000 single and $160,000–$180,000 joint. If you're funding college, wealthserene.com/tools/college-planner can map costs and aid.

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