Sstudy at university in the United States can be very expensive, so it’s important that you look for ways to try to lower your costs. Two education tax credits are proposed, namely the US Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC).
In order to claim an education credit, three conditions must all be met:
- You, your dependent, or a third party pay eligible tuition fees for higher education.
- A qualifying student must be enrolled at a qualifying educational institution.
- The qualifying student is you, your spouse, or a dependent you list on your tax return.
How much is AOTC worth?
the AOTC is a tax credit worth up to $2,500 for tuition, certain required fees, and course materials necessary for attendance, with this money paid out in the tax year.
In addition, 40% of the credit amount you are entitled to can be refunded to you if it is more than the tax you owe (up to $1,000).
In order to receive the AOTCyou must be a student who:
- Was enrolled at least half-time in a recognized diploma, certificate or other credential program for at least one academic term during the tax year,
- Has not completed the first four years of post-secondary education (education after high school) at the start of the tax year,
- Has not claimed (or someone else has not claimed) the AOTC for the student for more than four years, and
- Has not been convicted of a federal or state drug offense at the end of the tax year.
Can I apply for the AOTC for the four years I pay tuition?
As long as you remain an eligible student and no one can claim you as a dependent on their tax return, the AOTC will be available for qualifying expenditures paid in each tax year.