How do the Credits Differ?
The American opportunity credit:
- Is permitted for the first four years of postsecondary education
- Qualified tuition and related expenses include expenses for course materials—books, supplies, and equipment needed for a course of study, whether or not the materials are purchased from the educational institution as a condition of enrollment or attendance
- Generally, 40% of the credit is a refundable credit, which means taxpayers can receive up to $1,000 even if they owe no taxes
Lifetime learning credit:
- There is no limit on the number of years the lifetime learning credit can be claimed for each student
- Course-related books, supplies, fees, and equipment are included in qualified education expenses only if they must be paid to the institution as a condition of enrollment or attendance
- No portion of the credit is refundable
For more complete information, review the Comparison of Education Credits table in the Volunteer Resource Guide.
Bob is a full-time student and is a fifth-year senior. Does he qualify for the American opportunity credit? Bob does not qualify for the American opportunity credit because he is in his fifth year of postsecondary education.