What Student Tax Credits Can I Claim for My Education Expenses?

What to Know About Student Tax Credits

At Tax Pros Online, one common question we get from students looking for tax services is what tax credits they can claim.

Higher education can be expensive, but the U.S. tax code offers several valuable tax credits to help offset the costs. Here are the main education tax credits available to eligible students:

American Opportunity Tax Credit (AOTC)

The AOTC is generally the most generous education tax credit available. You can claim up to $2,500 per eligible student per year, and 40% of the credit (up to $1,000) is refundable, meaning you can receive it even if you don’t owe taxes.

Key Features of AOTC

Available only for the first four years of post-secondary education
Maximum credit is $2,500 per eligible student
Covers qualified expenses including tuition, required fees, and course materials
Income limits: Phases out between $80,000-$90,000 for single filers, $160,000-$180,000 for joint filers
Must be enrolled at least half-time in a degree program

Let’s Talk about your taxes!

Lifetime Learning Credit (LLC)

The LLC is more flexible than the AOTC but offers a lower maximum benefit. It’s particularly valuable for graduate students and lifelong learners who are no longer eligible for the AOTC.

Key Features of LLC

No limit on the number of years you can claim it
Maximum student tax credit is $2,000 per tax return (not per student)
Covers tuition and required fees, but not books or supplies
Income limits: Phases out between $80,000-$90,000 for single filers, $160,000-$180,000 for joint filers
Available for any post-secondary education, including graduate school and professional courses

Important Considerations

You cannot claim both the AOTC and LLC for the same student in the same year – you must choose one.
Qualified expenses must be paid during the tax year for education in an academic period that begins in that tax year or the first three months of the following year.
Expenses paid with student loans can qualify, but expenses paid with tax-free scholarships, grants, or employer assistance programs generally cannot.
Keep detailed records of your educational expenses and any Form 1098-T received from your educational institution.

How to Claim

To claim either student tax credit you will first:

Complete Form 8863 and attach it to your Form 1040 or 1040-SR
Maintain records of qualified expenses
Have a valid Social Security number or ITIN by the due date of your return

Remember that tax laws can change, and individual circumstances vary. It’s advisable to consult with a tax professional or the IRS website for the most current information and guidance specific to your situation.

Contact Us for Help with Your Student Tax Credits!

Need a tax professional to handle your taxes on your behalf, and to assist with your student tax credits?

At Tax Pros Online, we are the experts and can help you prepare for the next tax season! Our tax professionals offer the following services: single, married filing jointly, head of household, W-4, W-2 income, interest income, dividend income, unemployment income, dividend income, retirement income, stock sales, IRA distributions, tax credits, and more. For a complete list of our services, please look at our tax information page.

Ready to get started with tax filing? Contact our team today!

Let’s Talk about your taxes!