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:

• Tweet one of our Twitter Messages
• Hang a poster or handout our flyers. See our Education Products page.
• Link to:
  • Our Education Credits page
  • IRS Education Benefit YouTube videos and/or run them on your cable channel
    • English: Education Tax Credits
    • Spanish: Créditos Tributarios de Educación
    • American Sign Language: Education Tax Credits (Captions & Audio)

 

Here's what those who prepare the Form 1098-T 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:

• Eligibility requirements--start with our comparison chart for a quick look or review the Education Credits pages for more details.

 

• 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.

 

• If the student didn't receive a Form 1098-T, inform your client that IRS may ask for documentation to support the credit. See Forms 866-H-AOCand 866-H-AOC-MAX for examples of the documentation needed. Also available in Spanish, Form 866-H-AOC(SP).

 

• 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.

 

• Protect your clients by knowing the questions to ask to help your client's get the most out of Education Tax Benefits.

 

• Avoid Common AOTC Errors

Education Tax Credit Resources

Find out  who qualifies for the Education Credits

 

Know the Questions to Ask about Refundable Credits

 

Find the latest news for refundable credits on What's Hot?

 

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

 

Find out how to Avoid Common AOTC Errors

 

Education Credits Products

 

Related Technical Forms and Publications

• Publication 970, Tax Benefits for Education
• Form 8863, Education Credits
• Instructions for Form 8863
• Form 8917, Tuition and Fees Deduction
• Form 1098-T, Tuition Statement (Info Only)
• Instructions for Forms 1098-E and T