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 will be considered a payment on your return. If that amount is more than you owe, you may get a refund.

The Lifetime Learning Credit is a non-refundable tax credit, 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 benefits and fees on the IRS’s comparison chart.

Determine your eligibility

You may be eligible to claim an education credit if:

  • The student is yourself, your spouse, or a dependent you list on your tax return.
  • 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 can't have a felony drug conviction and claim the American Opportunity Tax Credit.

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.
  • 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.
  • Student must have a Social Security Number (SSN), Individual Taxpayer Identification Number (ITIN), or an Adoption Taxpayer Identification Number (ATIN) at the time return is filed.

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 retroactive returns or amended returns claiming the American Opportunity Tax Credit (AOTC) if the reason you are filing is because you now have the type of valid Taxpayer Identificaiton Number (TIN) required for each credit but didn’t have such TIN before the due date of the return.

If for any reason you or one of your family members didn't receive a valid “taxpayer identification number” by 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 an Social Security Number (SSN), Individual Taxpayer Identification Number (ITIN), or Adoption Taxpayer Identification Number (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.

Have a different tax issue?  Browse common issues and situations at Get Help.

Is your tax problem more complex?  If your issue is causing you financial hardship, you've tried repeatedly and aren't receiving a response from the IRS, or you feel your taxpayer rights are being violated, consider contacting Taxpayer Advocate Service (TAS).

Do you feel that you need help from a tax professional but can’t afford one? You may be eligible for representation from an attorney, certified public accountant (CPA), or enrolled agent associated with a Low Income Taxpayer Clinic.

Last modified December 21, 2017