What Has Recently Changed with Education Credits?
Here are a few changes due to recent legislation for education tax credits.
There used to be 3 education tax credits, now there are 2. The American Opportunity Credit (Spend $4k and get $2.5k in credit) and the Lifetime Learning Credit (Spend $10k and only get $2k).
A few items to note:
-For the American Opportunity Credit, you only have the ability to use this credit for 4 years, so it may be worth strategizing with your tax advisor on which expenses can be used and which years it would be beneficial to use this credit.
-The American Opportunity Credit is normally a more advantageous credit.
-In 2021, the phase out limit for the Lifetime Learning Credit was increased to match the phase out period of the American Opportunity Credit.
Special note: (see 4:45)
If you have questions about your personal circumstances, please give us a call! Tax law is extremely nuanced and you need to know how these rules apply to your individual facts and circumstances. We’d love to help you. Give us a call at 281-440-6279 or email us at firstname.lastname@example.org to learn more.