Education Tax Breaks for Online College Courses

published 29 May 2015

Do online college courses qualify for the American Opportunity and Lifetime Learning tax credits, or do only classes taken in person at a brick-and-mortar college qualify? --N.F., Beltsville, Md.

Whether you take a class online or in person doesn’t matter; what matters is which institution is offering it. “The school must be accredited and eligible for federal financial aid,” says Mark Kantrowitz, publisher of Edvisors.com. Check eligibility at www.fafsa.ed.gov.

To qualify for the American Opportunity Credit, you must also be enrolled at least half-time in a program leading to a degree or other credential and be in the first four years of postsecondary education. And your income cannot exceed certain limits: in 2015, a modified adjusted gross income of less than $90,000 if you’re single or $180,000 if you’re married filing jointly. For the Lifetime Learning Credit, there’s no requirement that you attend school half-time, but your MAGI must be less than $65,000 if you’re single or $130,000 if you’re married filing jointly.

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As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.