If you paid college tuition last year, you may be eligible for one of two tax credits on your 2013 federal tax return.
The American Opportunity Credit was created under the American Recovery and Reinvestment Act of 2009 and extended through 2017 with the passage of the American Taxpayer Relief Act of 2012. It gives a tax credit for four years of undergraduate study of up to $2,500 a year. A portion (40 percent/$1,000) of the credit is refundable, which means the credit in excess of taxes due will be refunded.
The Lifetime Learning Credit is a nonrefundable credit of up to $2,000. Unlike the American Opportunity Credit, which may only be used up to four tax years per student, is not limited in the number of years it can be taken.
There are income limits that determine eligibility for these tax credits.
Who qualifies for the American Opportunity credit?
To take this credit, the taxpayer’s Modified Adjusted Gross Income must be $90,000 or less for single, head of household and qualifying widow(er) filing statuses, $180,000 for married filing jointly. Married filing separate taxpayers cannot take the credit….
Who qualifies for the Lifetime Learning Credit?
The maximum Modified Adjusted Gross Income for a single, head of household or widow(er) taxpayer is $63,000. For married filing jointly, the maximum is $127,000. Married filing separate taxpayers are not allowed the credit.