Financial Aid Policies Handbook

Federal Tax Credits

  • American Opportunity Tax Credit(A.K.A HOPE Tax Credit)
  • Lifetime Learning
  • Tuition and Fees Deduction

American Opportunity and Lifetime Learning are nonrefundable federal tax credits created during the Taxpayer Relief Act of 1997. None of these tax benefits are traditional scholarship or financial aid programs. However, for families who qualify, these tax benefits can assist with the affordability of a Colorado College education. The parent who claims the student on a tax return and pays the qualified tuition costs within that tax year may be eligible to qualify for the tax benefit. The actual amount of the credit depends on the taxpayer's income, the amount of qualified tuition paid, and the amount of certain other scholarships, grants, and allowances subtracted from the tuition.

The American Opportunity Tax Credit allows taxpayers to claim a maximum credit of up to $2,500 for tuition and fee expenses paid on behalf of the taxpayer, taxpayer's spouse, or a dependent. The Lifetime Learning Credit allows taxpayers to claim a maximum credit per family of $2,000, which equals 20 percent of up to $10,000 of expenses incurred during the taxable year for qualified tuition and fees for eligible students for post-secondary education. Family income limits apply.

Federal tax law allows tax filers to reduce the amount of income subject to tax by up to $4,000 for qualified education expenses paid during the tax year. This deduction is not available in combination with the American Opportunity or Lifetime Learning tax credit for the same person, or in combination with certain other tax benefits available for higher education. Family income limits apply.

We urge families to consult with their tax advisers for specific information. The IRS Web site at and IRS Publication 970 provide more information on the tax laws affecting the financing of higher education.

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Report an issue - Last updated: 12/17/2020