Can You Get Both American Opportunity Credit and Lifetime Learning Credit?

Tax credits help offset higher education costs, making college more affordable for students and families. The American Opportunity Credit (AOC) and the Lifetime Learning Credit (LLC) provide tax benefits for education expenses, but understanding how they work together is key to maximizing savings. Knowing whether both can be claimed in the same year—and under what conditions—can impact a taxpayer’s return.

Differences Between the Credits

The AOC and LLC serve different purposes depending on the student’s situation. The AOC is for undergraduate students pursuing a degree and offers a maximum credit of $2,500 per eligible student. The LLC applies to a broader range of education levels, including graduate courses and professional development, with a maximum credit of $2,000 per tax return.

A key distinction is how the credits are structured. The AOC allows 40% of the credit (up to $1,000) to be refundable, meaning taxpayers with no tax liability can still receive part of it as a refund. The LLC is entirely nonrefundable, meaning it can only reduce tax liability to zero. This makes the AOC more beneficial for students with little to no taxable income, while the LLC is more useful for those who owe taxes.

The AOC is limited to four tax years per student, making it ideal for those completing a traditional undergraduate degree. The LLC has no such restriction, allowing taxpayers to claim it indefinitely as long as they meet the requirements. This makes the LLC useful for lifelong learners, career changers, or those pursuing multiple degrees.

Eligibility Criteria

Eligibility depends on enrollment status, the type of institution attended, and prior use of the credit. To qualify for the AOC, the student must be pursuing a recognized degree or credential at an eligible institution and be enrolled at least half-time for one academic period during the tax year. The LLC does not require degree-seeking enrollment or a minimum course load, making it available to students taking individual courses to improve job skills.

The AOC can only be claimed for four tax years per student. Those who have already used it must look to other options, such as the LLC. Individuals with felony drug convictions are ineligible for the AOC, while no such restriction exists for the LLC.

Filing status also matters. Neither credit is available to those filing as “Married Filing Separately,” and both require the taxpayer to claim the student as a dependent if the student is not filing their own return. If parents claim a student as a dependent, the student cannot claim the credit, even if they paid their own tuition.

Qualified Education Expenses

Only certain costs qualify for the AOC and LLC. Tuition and mandatory fees required for enrollment are eligible if paid to an accredited institution. Expenses beyond tuition—such as textbooks, supplies, and equipment—must be directly required by the course. The AOC allows these materials to qualify even if purchased outside the school, while the LLC only permits them if the institution mandates the purchase.

Housing, transportation, and personal expenses do not qualify. Dormitory fees, meal plans, and commuting costs cannot be included. Health insurance, medical expenses, and student loan interest are also excluded, though student loan interest may be deductible under a separate tax provision. Any payments made with tax-free educational assistance, such as Pell Grants or employer tuition reimbursement, must be subtracted when determining the eligible credit amount.

Income Criteria

Both the AOC and LLC phase out for higher earners based on Modified Adjusted Gross Income (MAGI), which includes adjusted gross income (AGI) with certain deductions added back, such as foreign earned income exclusions and student loan interest deductions.

For the 2024 tax year, the AOC begins to phase out for single filers with a MAGI above $80,000 and is unavailable at $90,000. For married couples filing jointly, the phase-out range is $160,000 to $180,000. The LLC has a phase-out starting at $80,000 for single filers and $180,000 for joint filers, but unlike the AOC, it does not have a refundable portion.

Taxpayers exceeding the phase-out limits cannot claim the credit. Those within the phase-out range receive a reduced credit based on IRS formulas. Since these limits are not adjusted for inflation annually, taxpayers with salary increases or bonuses may unexpectedly lose eligibility.

Coordination When Claiming Both

Taxpayers cannot claim both the AOC and LLC for the same student in the same tax year, but they can claim one for one student and the other for a different student. Families with multiple students in college may be able to use both credits simultaneously. For example, if one child is an undergraduate and another is in graduate school, the parents could claim the AOC for the undergraduate and the LLC for the graduate student if they meet the eligibility requirements for both.

Since the AOC provides a higher maximum credit and includes a refundable portion, it is generally the better option when available. The LLC remains useful for students who have exhausted their four years of AOC eligibility or are enrolled in non-degree programs. Taxpayers must ensure that qualified expenses are allocated correctly, as the same expenses cannot be counted for both credits. If tuition and fees exceed the amount needed to claim the full AOC, any remaining eligible expenses could then be used for the LLC.

Documentation for Filing

Proper documentation is essential when claiming education tax credits. The most important document is Form 1098-T, which educational institutions issue to students or their families. This form reports the amount of qualified tuition and related expenses paid during the tax year, as well as any scholarships or grants received. However, the amounts listed on Form 1098-T may not always reflect the exact expenses that qualify for a credit, so taxpayers should cross-check these figures with their own payment records, such as tuition bills, bank statements, or receipts for required course materials.

Taxpayers should also keep proof of payment, including credit card statements, canceled checks, or electronic payment confirmations. If claiming the AOC, receipts for textbooks and supplies should be retained, especially if purchased from a third-party retailer rather than the school. Since the IRS may request documentation in an audit, keeping these records for at least three years after filing the tax return is advisable. Failing to provide adequate proof could result in the credit being disallowed and potential penalties.