June 24, 2021

Which Tax Breaks Can Students (or Their Parents) Claim in 2020 and 2021? | Investment

Which Tax Breaks Can Students (or Their Parents) Claim in 2020 and 2021? | Investment


2. The Lifetime Learning Credit (LLC)

While the AOTC applies to postsecondary education, the LLC can be used to offset any education costs you may have incurred. The LLC is worth 20% of up to $10,000 in qualified education expenses for a total of $2,000. However, unlike the AOTC, the LLC isn’t refundable at all, so the most it can do is knock your tax liability down to $0.

Like the AOTC, there are income limits associated with the LLC. For the 2020 tax year, you can claim the LLC in full if you’re a single tax filer with a modified adjusted gross income (MAGI) of $58,000 or less. If you’re married filing a joint tax return, you can claim the LLC in full with a MAGI of $116,000 or less. Meanwhile, you can claim a partial credit if your MAGI exceeds $58,000, but not does exceed $68,000 as a single tax filer; or if your MAGI exceeds $116,000, but does not exceed $136,000 as a married couple filing jointly.

In 2021, you can claim the LLC in full if you’re a single tax filer with a MAGI of $59,000 or a married couple filing jointly with a MAGI of $119,000. From there, the credit will phase out completely once your MAGI exceeds $69,000 as a single tax filer or $139,000 as a married couple filing jointly.



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