Many students realize a critical difference between American Opportunity Credit and Lifetime Learning Credit. Both credits are intended to help fund students’ higher education expenses, but they serve very different purposes. This article explains the key differences between these two educational benefits that stand out in terms of who qualifies for each credit.
Summary Table
| AOC | Lifetime Learning Credit |
| Shorter period | Longer period |
| Available for all eligible citizens | Available only for students |
What is AOC?
American Opportunity Credit or AOC is a federal tax credit that helps offset the cost of higher education expenses. It was introduced in the 2013 tax year and is only available to students enrolled at least half-time in an eligible educational institution.
It applies to up to $2,500 of eligible expenses per year, per student. Eligible expenses include tuition and fees, course materials, and other costs associated with attending an eligible educational institution.
To qualify for American Opportunity Credit, you must meet several requirements: You must be enrolled at least half-time in an eligible educational institution. The term “eligible educational institution” means a public or private nonprofit postsecondary institution (including community colleges) or any other accredited non-profit school (such as trade schools). If you are enrolled at least half-time in a graduate program or have completed at least one academic year of study after completing high school, you may be eligible for up to ,500 of credit per year, per student.
What is Lifetime Learning Credit?
Lifetime Learning Credit is a federal tax credit that helps offset the cost of higher education expenses. It was introduced in the 2009 tax year and is only available to students enrolled at least half-time in an eligible educational institution. It applies to up to $2,000 of eligible expenses per year, per student. Eligible expenses include tuition and fees, course materials, and other costs associated with attending an eligible educational institution.
To qualify for Lifetime Learning Credit, you must meet several requirements: You must be enrolled at least half-time in an eligible educational institution.
The term “eligible educational institution” means a public or private nonprofit postsecondary institution (including community colleges) or any other accredited non-profit school (such as trade schools).
If you are enrolled at least half-time in a graduate program or have completed at least one academic year of study after completing high school, you may be eligible for up to $2,000 of credit per year, per student.
AOC VS Lifetime Learning Credit: Which Is Better?
The key difference between American Opportunity Credit and Lifetime Learning Credit is the number of years you must be enrolled in an eligible educational institution. If you qualify for both credits, the maximum amount of credit you can receive is $2,500 for American Opportunity Credit and $2,000 for Lifetime Learning Credit.
If you are eligible for both credits, then you can choose to use the American Opportunity Credit or the Lifetime Learning Credit. This choice is important because Lifetime Learning Credit is only available to students enrolled at least half-time in an eligible educational institution.
Students who qualify for American Opportunity Credit will generally have lower costs and will save more money than students who qualify for Lifetime Learning Credit. In addition, it may be beneficial to consider taking advantage of both credits to maximize your education savings.
American Opportunity Credits: The best way to apply for American Opportunity Credits is through a qualified education expense deduction on your federal tax return form 1040 (Schedule A). For additional information about applying for this credit and how to claim it on your tax return, visit IRS Publication 970
