The American Opportunity Tax Credit modifies the existing Hope Credit for tax years 2009 and 2010 under ARRA. The credit was extended to apply for tax years 2011 and 2012 by the Tax Relief and Job Creation Act of 2010. The new credit makes the Hope Credit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. It also adds required course materials to the list of qualifying expenses and allows the credit to be claimed for four post-secondary education years instead of two. Many of those eligible will qualify for the maximum annual credit of $2,500 per student.
The Lifetime Learning Credit is useful for students who can't qualify for the American Opportunity Credit. The Lifetime Learning Credit provides a smaller tax benefit for an unlimited number of years in which the student takes one or more post-secondary educational courses. These courses can apply towards an undergraduate, graduate, or professional degree, certificate program, or other academic credential.
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