Here's what you need to know about the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). To be eligible for each credit, you must pay qualified education expenses of higher education for an eligible student. An eligible student is yourself, your spouse, or a dependent you claim on your tax return.
AOTC
The American Opportunity Tax Credit (AOTC) is a credit for qualified education expenses paid for an eligible student for the first four years of higher education. Forty percent of the American opportunity credit may be refundable.
- To be eligible for AOTC, the student must:
- Not have finished the first four years of higher education at the beginning of the tax year,
- Not have claimed the AOTC or the former Hope credit for more than four tax years,
- Be enrolled at least half-time for at least one academic period beginning in the tax year,
- Be pursuing a degree or other recognized education credential, and
- Not have a felony drug conviction at the end of the tax year.
- Limits on AOTC:
- You can get a maximum annual credit of $2,500 per eligible student.
- If the credit brings the amount of tax you owe to zero, you can have 40 percent of any remaining amount of the credit (up to $1,000) refunded to you.
- The amount of the credit is 100 percent of the first $2,000 of qualified education expenses you paid for each eligible student and 25 percent of the next $2,000 of qualified education expenses you paid for that student.
- To claim the full credit, your modified adjusted gross income (MAGI) must be $80,000 or less ($160,000 or less for married filing jointly).
- You receive a reduced amount of the credit if your MAGI is over $80,000 but less than $90,000 (over $160,000 but less than $180,000 for married filing jointly).
- You cannot claim the credit if your MAGI is over $90,000 ($180,000 for joint filers).
LLC
The Lifetime Learning Credit (LLC) is for qualified tuition and related expenses paid for eligible students enrolled in an eligible educational institution. The LLC is a non-refundable credit.
- To be eligible for LLC, the student must:
- Be enrolled in one or more courses at an eligible educational institution.
- Be taking higher education course or courses as part of a post-secondary degree program or taken by the student to acquire or improve job skills.
- Be enrolled for at least one academic period beginning in the tax year.
- Limits on LLC:
- It is worth up to $2,000 per tax return.
- There is no limit on the number of years you can claim the credit.
- To claim the full credit, your modified adjusted gross income (MAGI) must be $80,000 or less ($160,000 or less for married filing jointly).
- You receive a reduced amount of the credit if your MAGI is over $80,000 but less than $90,000 (over $160,000 but less than $180,000 for married filing jointly).
- You cannot claim the credit if your MAGI is over $90,000 ($180,000 for joint filers).
Academic period can be semesters, trimesters, quarters or any other period of study such as a summer school session. Academic periods are determined by the school. For schools that use clock or credit hours and do not have academic terms, the payment period may be treated as an academic period.
Claiming the credit
To be eligible to claim the AOTC or LLC, the law requires a taxpayer (or a dependent) to have received Form 1098-T, Tuition Statement, from an eligible educational institution, whether domestic or foreign.
If you did not receive a Form 1098-T, you may still be eligible to claim a credit because the student's educational institution isn't required to furnish Form 1098-T to the student under existing rules, for example if the student:
- is a qualified nonresident alien,
- has qualified education expenses paid entirely with scholarships,
- has qualified education expenses paid under a formal billing arrangement, or
- is enrolled in courses for which no academic credit is awarded.
If a student's educational institution isn't required to provide Form 1098-T to the student, you may claim a credit without Form 1098-T if you otherwise qualify by showing that you (or a dependent) were enrolled at an eligible educational institution and can substantiate the payment of the qualified tuition and related expenses.
To claim the LLC, you must complete the Form 8863. Attach the completed form to your Form 1040 or Form 1040-SR.
Use the Interactive Tax Assistant to see if you’re eligible to claim an education credit.
Resources
Education credits
- Compare education credits
- Qualified education expenses
- Education credits: Questions and answers
- No double benefits allowed
- Eligible educational institution
- American Opportunity Tax Credit
- AOTC key messages
- Education credits products
- Education credits—AOTC and LLC
- Lifetime Learning Credit
- Tax benefits for education: Information center
Useful forms and publications
- Publication 970, Tax Benefits for Education
- Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits)
- Form 8863 instructions
- Form 1098-T, Tuition Statement
- Form 1098-E and T Instructions
Education credit marketing materials
- Publication 4772, American Opportunity Tax Credit PDF
- Publication 5081, Education Credits Online Resource Guide PDF
- Publication 5198, Are you or a family member attending college or taking courses to acquire or improve job skills? PDF
Tax tips
- Tax tip 2022-38, Two tax credits that can help cover the cost of higher education
- Tax tip 2022-123, College students should study up on these two tax credits