Education Credits
An education credit helps with the cost of higher education by reducing the tax you owe on your return.
The American Opportunity Tax Credit is a partially-refundable tax credit for college education. The student must attend at least half-time. The credit is available for the first four years of college education.
“Refundable” means the credit is like a payment on your return. If that amount is more than you owe, you may get a refund of up to $1,000.
The Lifetime Learning Credit is a non-refundable tax credit of up to $2,000 per tax return, where you can claim qualifying expenses for any level of college or education courses to advance or improve job skills. There is no minimum enrollment requirement or limit on the number of years you can claim the credit.
“Non-refundable” means the credit will only reduce your tax. Even if the credit is more than you owe, you won't get a refund.
You can claim both the American Opportunity Tax Credit and the Lifetime Learning Credit on the same tax return, but not for the same student.
Compare the educational credits to see which fits your situation best
Each credit has different requirements and benefits. You can compare education credits and tuition and fees deduction on the IRS’s comparison chart.
Determine your eligibility
You may be eligible to claim an education credit if:
- You, your spouse, or a dependent on your tax return is the student.
- You, your dependent, or a third party (like a relative) is paying qualified education expenses for higher education.
- Qualified education expenses are tuition, fees, and other related expenses required for enrollment or attendance at an eligible educational institution. Nonacademic fees (like student activity fees or athletic fees) are qualified only if the fee must be paid to the institution as a condition of enrollment or attendance. Personal expenses (like room and board) are never qualified education expenses.
- The student is enrolled at or attending an eligible educational institution.
- This means any college, university, vocational school, or other post-secondary educational institution eligible to participate in a student aid program run by the U.S. Department of Education. If you’re not sure your school is eligible, ask the financial aid office.
- Your modified adjusted gross income (MAGI) falls under the limit for the credit (see the IRS’s comparison chart for details).
- For the American Opportunity Tax Credit, the student must also be pursuing a degree or other recognized education credential, and must be enrolled at least half-time for at least one academic period beginning during the tax year (or the first three months of the next tax year if the expenses were paid in the tax year).
You're NOT eligible if:
- Someone else, such as your parents, lists you as a dependent on their tax return.
- Your filing status is married filing separately.
- You already claimed or deducted another higher education benefit using the same student or same expenses.
- You (or your spouse) were a non-resident alien for any part of the year and didn't choose to be treated as a resident alien for tax purposes.
- The student has a felony drug conviction (applies only to a claim for the American Opportunity Tax Credit).
- You, (or your spouse if filing a joint return), and the qualifying student didn't have a valid taxpayer identification number (Social Security Number (SSN), or Individual Taxpayer Identification Number (ITIN), or Adoption Taxpayer Identification Number (ATIN)) issued or applied for on or before the due date of your return (including extensions).
Keep records of qualifying expenses you’ve paid
- The student should receive an IRS Form 1098-T, Tuition Statement, from the educational institution. If the student doesn’t receive the form, the student should request one from the institution. The credit can't be claimed without an IRS Form 1098-T, Tuition Statement.
- Be sure to keep records that show the student was enrolled and the amount of paid qualified tuition and related expenses. You may need to send copies of those records if the IRS contacts you regarding your claim of the credit.
Caution: The amount on Form 1098-T may not be the amount of expenses you can claim. Descriptions of which expenses qualify are available in IRS Publication 970, Tax Benefits for Education.
Be aware of common mistakes
- The student is listed as a dependent on another tax return.
- The student doesn’t have a IRS Form 1098-T showing he or she attended an eligible institution.
- Claiming non-qualifying education expenses (such as room and board, transportation, or other family/living expenses).
- Claiming the credit for a student not attending a college or other higher education institution.
- Trying to claim both credits for the same student.
- Filing a timely tax return and the student dosen't have a valid SSN, ITIN, or an ATIN at that time.
You can only claim one education credit for any student or expense. If you or your dependent qualifies for both credits, you may want to figure which deduction would give you the best benefit.
If you receive tax-free educational assistance, such as a grant, you need to subtract that amount from your qualified education expenses.
The PATH Act prevents you from filing past due returns or amended returns claiming the American Opportunity Tax Credit (AOTC) if the reason you're filing is because you now have the type of valid Taxpayer Identification Number (TIN) required for each credit but such TIN wasn't issued on or before the due date of the return (including a valid extension).
If for any reason you or one of your family members didn't receive a valid “taxpayer identification number” on or before the due date of the tax return (including extensions) you can't file a past due return or an amended return to claim any of these credits. A valid taxpayer identification number could be a SSN, ITIN, or ATIN depending on the requirement for each credit.
For tax years beginning after June 29, 2015, generally 2016 tax year returns, you must have received an IRS Form 1098-T from an eligible educational institution to claim the American Opportunity Tax Credit or Lifetime Learning Credit.
Browse common tax issues and situations at Get Help.
If your IRS problem is causing you financial hardship, you've tried repeatedly and aren't receiving a response from the IRS, or you feel your taxpayer rights aren't being respected, consider contacting the Taxpayer Advocate Service (TAS).
You may be eligible for representation from an attorney, certified public accountant (CPA), or enrolled agent (EA) associated with a Low Income Taxpayer Clinic (LITC). LITCs also provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language.
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