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The Hows of Taxes

Module 10: Education Credits

 

A diploma, books, and a graduation cap.
Taxpayers have two credits available to help offset the costs of higher education. This reduces their income tax. These credits are the American Opportunity Credit and Lifetime Learning Credit, also referred to as education credits.

The requirements for taking this credit depend on:
  • Filing status and AGI or MAGI of the taxpayer
  • Eligible education institution
  • Qualified tuition and related expenses
The American Opportunity Credit allows taxpayers to claim a credit of up to $2,500.

Taxpayers may claim a Lifetime Learning Credit of up to $2,000.

materials:

Tax Tutorial
Tax Tutorial: Education CreditsLearn all about education credits.
Fact Sheet
Fact Sheet: Education CreditsPrint this fact sheet on education credits.
Simulation
Simulation 10A: Claiming the American Opportunity Credit Take on the role of Jon Stillman and claim the American Opportunity Credit on your tax form.
Simulation
Simulation 10B: Claiming the Lifetime Learning CreditTake on the role of Judy Hood and claim the Lifetime Learning Credit on your tax form.
Assessment
Assessment: Education CreditsReview your understanding of education credits.
skill check:
Check your understanding of Education Credits. Indicate whether each of the statements below is true or false by clicking on the correct answer. To assess your answers, click the Check My Answers button at the bottom of the page.
  1. There are two Education Credits.
  • A.
  • B.
  1. Taxpayers whose modified AGI is $90,000 or more ($180,000 if married filing jointly) are not eligible to take either credit.
  • A.
  • B.
  1. Taxpayers who paid higher education expenses during the year for an eligible student can generally claim both the American Opportunity Credit and Lifetime Learning Credit if they meet the general requirements.
  • A.
  • B.
  1. For the third year in a row, Joan took several computer classes at a community college to improve her job marketability. She is eligible for the American Opportunity Credit.
  • A.
  • B.


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