Education Tax Credits

The income limits for claiming the Lifetime Learning Credit (LLC) and the American Opportunity Credit (AOC) are:

• To claim the full credit, your modified adjusted gross income (MAGI) must be $80,000 or less ($160,000 or less for married filing jointly).
• You receive a reduced amount of the credit if your MAGI is over $80,000 but less than $90,000 (over $160,000 but less than $180,000 for married filing jointly).
• You cannot claim the credit if your MAGI is over $90,000 ($180,000 for joint filers).

Your MAGI would include investment income, so if you sold stock with capital gains the same year, and your filing status is Single or head of household, then you MAGI could easily exceed the limits.  The students may be able to file and take the credit if they are not claimed as dependent on someone else's tax return.   

For more information see:  Tax Year 2023 Education Benefits Comparison Income qualifications were the same for 2022 and 2023.

Q. Are we really ineligible for any education tax credits?

A. Yes, if you realized capital gains that raised your income above $180,000 for the year.