2023 Tax Planning: Education Tax Benefits

Reading Time: 3 minutes

In this portion of our 2023 Tax Planning series, we walk through key Education Tax Benefits that come into play for 2023.

A Note from Us: At Akif CPA, we specialize in tax return preparation for individuals, families, and businesses. We are currently accepting new clients. Please contact us today if you require tax help.

Education Tax Benefits for 2023

We are highlighting three key areas of focus for education tax benefits in 2023—the American Opportunity Tax Credit, the Lifetime Learning Credit, and 529 Plans.

The American Opportunity Tax Credit Limits for 2023

For eligible students, a credit of up to $2,500 is available as part of the American Opportunity Tax Credit (AOTC). This credit covers qualified expenses a student incurs during the first four years of higher education with the goal of helping reduce the cost of attending colleges.

The AOTC is 100% for the firs $2,000 of qualified education expenses, and 25% of the next $2,000. Your modified adjust gross income must be $80,000 or less (or $160,000 or less if you are married and filing jointly).

*Note: You must have received a Form 1098-T, Tuition Statement from an eligible educational institution, and it’s important to be absolutely sure that you qualify before claiming it. Speak to a CPA if you are unsure, and to find out what other education-related tax savings are available to you.

The Lifetime Learning Credit

For eligible students, up to $2,000 is available annually for post-secondary school expenses under the Lifetime Learning Credit. This can be used for undergraduate, graduate, and professional degree courses (including job skills training), and there is no limit to the number of years that you can claim on the credit.

In order to qualify, you must:

  • Pay qualified education expenses for higher education
  • Be an eligible student at an eligible educational institution
  • Be the student or the spouse of the student, or the student is a dependent you list on your tax return.
  • Be enrolled and taking courses to get a degree, credential, or improve job skills
  • Enroll for at least one academic period in the tax year.
  • Your modified adjusted gross income is less than $80,000 ($160,000 if you are filing jointly)
  • Receive a Form 1089-T, Tuition Statement from your school

*Note: It’s important to be sure you qualify for the credit before claiming it. Speak with a CPA if you are unsure, and to learn about other education-related tax breaks and credits.

529 Plan Contribution Limits and Elementary/Secondary Use Limits for 2023

529 plans are a great option for individuals looking to save for future education costs. 529 plan contribution limits are set by state, and for 2023 range from $235,000 to $550,000 per beneficiary. See the amounts below (in progressive alphabetical order)

State2023 Contribution Limit
Alabama, Alaska$475,000
Arkansas, Colorado, District of Columbia, Idaho, Illinois, Louisiana, Maryland, Massachusetts, Michigan, Nebraska, Nevada, New Mexico, Texas, Washington$500,000
Connecticut, Missouri, Vermont,Virginia, West Virginia$550,000
Delaware, South Dakota, Tennessee$350,000
Georgia, Mississippi$235,000
Hawaii, New Jersey$305,000
Indiana, Kansas, Kentucky, Oklahoma$450,000
Maine, New York, Rhode Island$520,000
New Hampshire$569,123
North Carolina, Utah$540,000
North Dakota$269,000
South Carolina$540,000

For beneficiaries, 529 plans can be used to cover $10,000 of tuition per year for elementary and secondary schools (for public, private, and religious institutions).

*Note: Starting in 2024, funds in 529 plans can be rolled over into Roth IRAs in many scenarios for up to $35,000 in funds. If this interests or impacts you, please speak with a CPA.

Looking for 2023 Tax Bracket Info?

For information on 2023 Tax Brackets, and to see how 2024 Tax Brackets will compare, read: 2024 Tax Brackets vs. 2023 Tax Brackets.

Ready to Get Started on Your Taxes?

Get an early start on your taxes! Contact us today

Further Reading in this Series
Sign Up For Our Weekly Newsletter
Based on 107 reviews
powered by Google
Annie Phillips
Annie Phillips
12:35 10 Oct 21
Turn around time was amazing on the project I needed done. When you don’t understand all the different forms... communication is key and you will get that here. They are there to explain what and why you need it.read more
Meru Kapadia
Meru Kapadia
23:33 01 Oct 21
I usually don't write reviews much as everyone has different experiences, but definitely wanted to share the positive... experience I have had here and why I would recommend them to all my family, friends and co-workers.I got a referral for here from a friend, so thought of giving them a try over my old CPA firm. I have been going here for a couple years now and have to say they are top notch. They are always responsive and willing to work with me even when I am delayed. I generally like to ask a lot of questions and not once did I feel like they were annoyed by it and would very thoroughly and positively answer all my concerns with detail explanations. Even during the pandemic, they worked with me 100% virtual and it was seamless. Overall, I am very happy with this firm and will continue with them for the foreseeable future.read more
Kevan Shah
Kevan Shah
21:45 01 Oct 21
I’ve been going to them for 3 years now for multiple of my businesses. I changed to them after I had problems with my... previous CPA firm and I’m so glad I did! Best decision I ever made for my businesses. They have saved me thousands of dollars over the years as well as deal with my immensely complicated tax filling issues. No matter when I call, they always help answer all my questions (and trust me I have a lot) and put my mind at ease on all my concerns. I feel as if I am family the way they take care of me. The quality of their work has not changed; very consistent and professional. It is an understatement when I say I highly recommend them.read more
Maunil Shah
Maunil Shah
16:19 01 Oct 21
AKIF CPA is the best place for your tax needs! Saim has been easily available for my all my questions and concerns. ... Couldn’t ask for a better firm that provides excellent service and a familiarity with their clients. I always recommend family and friends to AKIF CPA!!read more
Shah Hussain
Shah Hussain
03:58 01 Oct 21
Hello AKIF CPA,I wanted to share my experience with you, your team and whomever may be reading this message. My most... humble thanks to you and your team for a being such great part of my success.You have done a fabulous job for us this year, and since you took over our books (during our most devastating times) you have literally taken weight off of our shoulders.Thanks for bringing everything up to date and also providing us with numbers or as you call it consultations, ahead of time so we could seal the holes.Great work!!!Shah H.read more
Sumit Dalwadi
Sumit Dalwadi
04:57 30 Sep 21
The professionals at Akif have been absolutely amazing! Quick to answer all the questions I had and always available... to offer their guidance.read more
Calvin R
Calvin R
20:21 29 Sep 21
I recommend these guys! I will be going back next year. They made everything simple and we understood what was... happening. There we issues with our taxes due to our previous accountant and these guys fixed everything. They answered our questions and service was always with a smile.read more
Ammoria Daniels
Ammoria Daniels
02:11 16 Sep 21
We contacted Akif with an urgent matter regarding corporate taxes. Akif immediately understood what was needed and... within days had everything ready to sign. The level of service we received was amazing and unmatched. Waqar expertise in trucking industry made our situation seamless. His communication was outstanding; I heard from him daily and could have been completed sooner if I was as fast as he was 😃 Highly recommended!read more
Joe Paneitz
Joe Paneitz
18:30 18 Aug 21
What an absolute pleasure to work with this CPA firm. My business is already seeing such a positive impact and growth.... I cannot believe I didn't connect with them sooner. This firm is helping in so many ways! 5 stars is an understatement! Thank you so much for your help AKIF CPAread more
Helptest ARCpoint Labs
Helptest ARCpoint Labs
15:02 18 Aug 21
The firm is quick, responsive, and has the latest technological software. Thus far, I have been with them for 3+ years... and will continue to work with them even after relocating. They make it easy even when I'm miles away. Would highly recommend them.read more
Luz Tipaz
Luz Tipaz
16:06 13 Jul 21
Saim and his team are the best CPAs in town. I have been their client for years. All started when I needed help with... company structure with multiple companies and then accounting and Taxes. I have been very happy ever since. Thank you AKIF CPA.read more
Maria perez
Maria perez
18:31 08 Jun 21
Me and my husband have been getting all of our personal Taxes, business Taxes, monthly bookkeeping, accounting and... payroll done with AKIF CPA. Recently, we had more stuff come up and had detailed analysis done on capital gains, single family rentals (SFR) and business disposition. You will only know how great this CPA company is until you have worked with them and given them a chance. Words can’t describe our experience. AKIF CPA gets the job done every time - very reliable, professional and affordable.read more
Afnaan Amin
Afnaan Amin
22:14 02 Jun 21
Very good experience, we had unique situation in regards to cross border income as Canadians currently residing in the... US. Income on both sides of the border through completely different channels. Everything was very easy and completed timely, I also had lots of random questions and Mohammad provided top notch service along the way and even after we finished our taxes!! Highly recommended.read more
Ryan Paton
Ryan Paton
10:56 08 May 21
I moved to the USA from Canada late 2018 as part of a promotion/relocation for work. For my 2019 returns, I used an... accounting firm recommended by the local Canadian social club in my city, which was a terrible experience. They were slow to respond to inquiries and would follow up in piecemeal requests which dragged out my return process over several months, often asking for information I had already provided.For the price I paid, I vowed to find better service. I found Mohammad online and decided to reach out. Mohammad was extremely responsive, took care of my US and Canadian returns as well as my wife's business returns in a timely manner. Overall, it was a very positive experience and I would recommend him to another in my situation.read more
Tuan Vo
Tuan Vo
01:59 20 Apr 21
I relocated to Texas from Alberta, Canada and needed a CPA to help me with my cross-border taxes as I was not happy... with the CPA that I used previously. During my interviewing process to find another CPA, I had good feedback from Mohammad as he was able to answer my questions regarding my unique tax situation with expertise, and importantly to me, in a timely manner. I decided to use his services for the current tax year and I have nothing but compliments for the work Mohammad provided. If you are in need of a professional cross-border CPA, I highly recommend reaching out to Mohammad Akif.read more
See All Reviews

Crypto Tax & Accounting Newsletter Signup


Cross-Border Tax Newsletter Signup