Slowly but surely, Tax Day 2022 is approaching. As you prepare to file your tax return, we encourage you to consider the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC), two higher education credits that can reduce the amount of tax you owe.
Education Tax Credits: What You Need to Know
The aim of both the AOTC and the LLC is to help with the cost of higher education by lowering the amount of tax owed on your return.
As we’ll see later, there are some differences between these two credits. However, three conditions must be met in order to qualify:
- You, your dependent, or a third party pays qualified education expenses for higher education.
- An eligible student must be enrolled at an eligible educational institution.
- The eligible student is yourself, your spouse, or a dependent you list on your tax return.
On the other hand, you CANNOT claim these credits if someone else (such as your parents) lists you on their tax return; if your filing status is married filing separately; if you already claimed or deducted another higher education benefit using the same student or same expenses; or if you or your spouse were a non-resident alien for any part of the year and did not choose to be treated as a resident alien for tax purposes.
Differences Between AOTC and LLC
One of the most important differences between these two credits is that the AOTC, applies only when the student hasn’t completed four years of post-secondary education before 2021. Plus, the student must be pursuing a degree or other recognized education credential and must have no felony drug convictions as of the end of 2021.
By contrast, it’s possible to qualify for the LLC with all years of post-secondary education and for courses to acquire or improve job skills. Additionally, the student does not need to be pursuing a degree or other recognized education credential. Finally, the requirement of no felony drug convictions does not apply in this case.
If you need help determining whether you qualify for these credits, don’t hesitate to contact our experts. We’ll be happy to answer all your questions.
Need Help With Your Taxes? Contact the Experts at Delgado’s Insurance
At Delgado’s Insurance, our mission is to help you make sense of your options to reduce your liability and maximize your deductions while staying compliant with all relevant laws and regulations.
We have locations in Riverside, California, and Bloomington, California. Contact us today by telephone (951-361-0084, 909-421-9003), email (mail@delgadosinsurance.com), or through our social media accounts (Facebook, Twitter) to get a free quote and learn more about our wide array of services.
