Job-Skills Classes Tax Credit

The Lifetime Learning Credit and the American Opportunity Credit are now the principal tax credits for education. For 2021 and beyond, both credits now have the same income phaseout range: $80,000 to $90,000 of adjusted gross income for most single filers, and $160,000

to $180,000 for most married couples filing jointly.

The American Opportunity Credit provides a maximum

tax reduction of $2,500 per student per year, which is composed of 100% of the

first $2,000 of eligible expenses and 25% of the next $2,000. In general, it is

available for the first four years of postsecondary education, and it applies to

tuition and course-related expenses, not room and board.

The Lifetime Learning Credit is typically less generous, but applies to a broader

range of education expenses. It is a tax offset of 20% of up to $10,000 of eligible

expenses, or up to $2,000 per taxpayer per year. It can be used not only for

undergraduate education but also for graduate education, continuing education,

and jobs-skills classes even if the skills aren’t related to current employment.

A taxpayer can’t claim more than one of these credits for the same student

per year.