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Paying for College

Tax Benefits for Education

Tax season is upon us, and if you paid money for college last year, you may be eligible for an education tax benefit. We’ve put together the facts on what’s available below. As always, speak with your tax advisor for full details and to determine if you’re eligible. You can also review IRS Publication 970, which provides an overview on tax benefits for education.

American Opportunity Tax Credit (AOTC)

The American Opportunity Tax Credit provides a partial refund for qualified tuition, fees, and course materials paid toward the first four years of post-secondary education. It matches up to 100% of the amount paid for these costs to a maximum of $2,000, plus 25% of the next $2,000 spent. The maximum credit is $2,500 and 40% of it is refundable (meaning only 40% can be used to increase your tax refund). The AOTC is not available for individuals with a modified AGI over $90,000 (and over $180,000 for married couples filing together).

Lifetime Learning Credit (LLC)

The Lifetime Learning Credit is equal to 20% of the first $10,000 spent on qualified education expenses for post-secondary education, up to a maximum of $2,000. The credit is limited to individuals with a modified AGI of less than $68,000 ($136,000 for married couples filing jointly) and is non-refundable (so you won’t receive the credit as a refund but it can lower the amount of tax you owe).

Tuition & Fees Deduction

With the Tuition & Fees Deduction, tax filers may deduct up to $4,000 in qualified higher education expenses from taxable income for themselves, their spouses, and their dependents. Tax filers with a modified AGI up to $65,000 ($130,000 if married filing jointly) may claim a maximum $4,000 deduction, and those with a modified AGI between $65,001 and $80,000 ($130,001 and $160,000 if married filing jointly) may claim a maximum $2,000 deduction.

You are eligible to claim multiple benefits above on one tax return, but not for the same student or the same expenses. For general tax information, visit the IRS website. And for any questions related to college planning and financial aid, contact us here at MEFA at (800) 449-MEFA (6332) or

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