What You Need to Know about AOTC and LLC

The American Opportunity Tax Credit and the Lifetime Learning Credit reduce taxpayers' income tax liability on a dollar-for-dollar basis for qualified education expenses. This helps offset the cost of higher education.
 
Here's what colleges, universities, trade and technical schools, educational organizations, student organizations, high schools need to know:


IRS has products to help you inform students and parents about the availability of education tax benefits:

 

Here's what colleges, universities, trade and technical schools and Form 1098-T preparers need to know:

The importance of providing an accurate and timely Form 1098-T, Tuition Statement, to help students offset the cost of higher education and help them avoid costly errors with IRS. See the Instructions for Forms 1098-E and 1098-T for more information.

Here's what tax return preparers need to know:

 

  • Review Form 1098-T-- did student attend at least half time for a full academic period? Is graduate student checked? What academic period do the reported amounts cover? Remember the amounts in Boxes 1 and 2 on the Form 1098-T may differ from the amounts your client can use to compute a credit on this year's tax return.

 

 

  • Complete and file Form 8863--Part 1 for AOTC, Part 2 for LLC and your client must verify eligibility by completing Part III for both credits.

 

  • Remember No Double Benefits Allowed-your client can claim only one tax benefit for the same education expenses and for the same student. Ask where the education funds came from--tax-free scholarship or grant, Department of Veteran's Affairs, tax-free portion of a Coverdell education savings account or a qualified tuition program.

 

 

 

 

Find out more about who qualifies for the Education Credits 

 

Know the Questions to Ask about Refundable Credits

More Education Credits Resources:

Find the latest news for refundable credits on Hot Topics for Refundable Credits

See the AOTC, the LLC and the Tuition Deduction criteria side by side on our Compare Education Credits and Tuition and Fees Deduction chart

Whether you are involved in education, interact with students or parents of students or are a tax return preparer, find out What You Need to Know about AOTC and LLC

Find out how to Avoid Common AOTC Errors

Education Credits Products

Related Technical Forms and Publications

Return to Other Refundable Credits Toolkit Welcome page 

Page Last Reviewed or Updated: 10-Feb-2014