Education Tax Credit
An Education Tax Credit is a tax incentive that reduces the amount of income tax owed by an individual or taxpayer. It is designed to offset the costs associated with higher education expenses, including tuition, fees, and sometimes related expenses.
There are two primary types of education tax credits in the United States: the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC).
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The AOTC provides a credit of up to $2,500 per eligible student for qualified education expenses during the first four years of post-secondary education. It is partially refundable, meaning some taxpayers may receive a refund even if they owe no taxes.
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The LLC offers a credit of up to $2,000 per tax return for qualified tuition and related expenses for students enrolled in eligible educational institutions. Unlike the AOTC, the LLC is non-refundable.
Taxpayers must meet specific income limitations and other eligibility criteria to claim these credits, and they can help reduce the overall cost of pursuing higher education.
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