Education credits: Questions and answers

 

Find answers to common questions about education credits – the American Opportunity Tax Credit (AOTC) and Lifetime Learning Credit (LLC).

Check if you're eligible to claim an education credit.

Q1. Have there been any changes in the past few years to the tax credits for higher education expenses? (updated Jan. 10, 2025)

A1. No, but the Protecting Americans Against Tax Hikes (PATH) Act of 2015 made AOTC permanent. The AOTC helps defray the cost of higher education expenses for tuition, certain fees and course materials for 4 years.

To claim AOTC or LLC, use Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits). If you claim AOTC, the law requires you to include the school’s Employer Identification Number (EIN) on this form.

The Trade Preferences Extension Act 2015 requires most students to have received a Form 1098-T, Tuition Statement. To be eligible to claim AOTC or LLC, the law requires a taxpayer or dependent to have received Form 1098-T from an eligible educational institution (exceptions apply; see Q&A 18).

Q2. How does AOTC differ from LLC? (updated Jan. 10, 2025)

A2. Unlike other education tax credits, AOTC is allowed for expenses for course-related books, supplies and equipment that aren’t necessarily paid to the educational institution but are needed for attendance. It also differs because you can claim the credit for 4 tax years instead of no limit on the number of years you can claim LLC.

Q3. How much is AOTC worth?

A3. It’s a tax credit of up to $2,500 of the cost of tuition, certain required fees and course materials needed for attendance and paid during the tax year. Also, 40 percent of the credit for which you qualify that is more than the tax you owe (up to $1,000) can be refunded to you.

Q4. How does AOTC affect my income taxes?

A4. You reduce the amount of tax you owe dollar for dollar by the amount of AOTC you qualify for up to the amount of tax you owe. If the AOTC amount is more than the tax you owe, then up to 40 percent of the credit (up to $1,000) can be refunded to you.

Q5. What are qualified tuition and related expenses for education tax credits?

A5. In general, qualified tuition and related expenses for education tax credits include tuition and required fees for enrollment or attendance at eligible post-secondary educational institutions (including colleges, universities and trade schools). Expenses paid during the tax year must be for an academic period that begins in the same tax year or an academic period that begins in the first 3 months of the following tax year.

The following expenses don’t qualify for AOTC or LLC:

  • Room and board
  • Transportation
  • Insurance
  • Medical expenses
  • Student fees, unless required as a condition of enrollment or attendance
  • Same expenses paid with tax-free educational assistance
  • Same expenses used for any other tax deduction, credit or educational benefit

Q6. What additional education expenses qualify for AOTC but not LLC? (updated Jan. 10, 2025)

A6. For AOTC but not LLC, qualified tuition and related expenses include amounts paid for books, supplies and equipment needed for a course of study. You don’t have to buy materials from the eligible educational institution. Add amounts paid for these materials on Form 8863 to your other adjusted qualified education expenses. The total of all qualified tuition and related expenses for calculating AOTC can’t exceed $4,000 and as explained in Q&A 3, the maximum allowable credit is $2,500. See Qualified education expenses.

Q7. Does a computer qualify for AOTC?

A7. It depends. The amount paid for the computer can qualify for AOTC if you need the computer for attendance at the educational institution.

Q8. Who is an eligible student for AOTC?

A8. An eligible student for AOTC:

  • Was enrolled at least half-time in a program leading toward a degree, certificate or other recognized educational credential for at least 1 academic period during the tax year
  • Hasn’t completed the first 4 years of post-secondary (education after high school) at the beginning of the tax year
  • Hasn’t claimed (or someone else hasn’t claimed) AOTC for the student for more than 4 years
  • Wasn’t convicted of a federal or state felony drug offense at the end of the tax year

Q9. If a student was an undergraduate student during the first part of the tax year and became a graduate student that same year, can the student claim or be claimed for AOTC for the qualified tuition and related expenses paid during the entire tax year?

A9. Yes, AOTC can be claimed for this student for qualified educational expenses paid during the entire tax year, if all other requirements are met and the student:

  • Hasn’t completed the first 4 years of post-secondary (education after high school) education as of the beginning of the tax year
  • Hasn’t claimed AOTC for more than 4 tax years

Q10. I'm just beginning college this year. Can I claim AOTC for all 4 years I pay tuition?

A10. Yes. If you remain an eligible student and no one can claim you as a dependent on their tax return, AOTC is available for qualifying expenses paid during each tax year.

Q11. How do I calculate AOTC?

A11. You calculate AOTC based on 100 percent of the first $2,000 of qualifying expenses, plus 25 percent of the next $2,000, paid during the tax year.

Q12. Is there an income limit for AOTC? (updated Jan. 10, 2025)

A12. Yes. To claim the full credit, your modified adjusted gross income (MAGI; see Q&A 13) must be $80,000 or less ($160,000 or less for married taxpayers filing jointly). If your MAGI is over $80,000 but less than $90,000 (over $160,000 but less than $180,000 for married taxpayers filing jointly), the amount of your credit is reduced. If your MAGI is over $90,000 ($180,000 for married taxpayers filing joint), you can't claim AOTC.

Q13. What is "modified adjusted gross income" for the purpose of AOTC?

A13. For most filers, it’s the amount of your adjusted gross income (AGI) from your tax return. If you file Form 1040 or 1040-SR, your MAGI is the AGI on line 11 of that form, modified by adding back any:

  • Foreign earned income exclusion, housing exclusion or housing deduction
  • Exclusion of income by bona fide residents of American Samoa or Puerto Rico

Q14. How do I claim an education tax credit?

A14. To claim AOTC or LLC, use Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits). If you claim AOTC, the law requires you to include the school’s Employer Identification Number on the form.

Q15. Where do I put the amount of my education tax credit on my tax return? (updated Jan. 10, 2025)

A15. To claim AOTC, complete Form 8863 and submit it with your Form 1040 or 1040-SR. Enter the nonrefundable part of the credit on Schedule 3 (Form 1040 or 1040-SR), Line 3. Enter the refundable part of the credit on Form 1040 or 1040-SR, Line 29.

To claim LLC, complete Form 8863 and submit it with your Form 1040 or 1040-SR. Enter the credit on Schedule 3 (Form 1040 or 1040-SR), Line 3.

Q16. My dependent child attended college half-time in 2024 for a semester and will attend full time starting 2025. Can I skip taking AOTC for 2024 because her expenses are low and claim AOTC for 2025 and future years? (updated Jan. 10, 2025)

A16. Yes. You aren’t required to claim the credit for a particular year. If your child’s college doesn’t consider your child to have completed the first 4 years of college at the beginning of 2024, you can qualify to take the credit for up to 4 tax years.

Q17. I completed 2 years of college right after graduating from high school years ago before there was the Hope Credit or AOTC. I now returned to college to finish my degree on a part-time basis; can I claim AOTC and, if so, for how many years?

A17. You can claim AOTC for any semester or other academic period if you take at least half of the full-time course load for the first 4 years of college. If you take half the course load for at least 1 semester or other academic period of each tax year and your college doesn’t consider you to have completed the first 4 years of college as of the beginning of the tax year, you can qualify to take AOTC for up to 4 tax years.

Q18. What is Form 1098-T, Tuition Statement, and do I need to receive a Form 1098-T to claim AOTC? (updated Jan. 10, 2025)

A18. Form 1098-T is a form provided to you and the IRS by an eligible educational institution that reports, among other things, amounts paid for qualified tuition and related expenses. It may be useful in calculating the amount of the allowable education tax credits. In general, a student must receive a Form 1098-T to claim an education credit, but an eligible educational institution isn’t required to provide it to you in certain circumstances:

  • Nonresident alien student, unless the student requests the institution to file Form 1098-T
  • Student whose tuition and related expenses are entirely waived or paid entirely with scholarships or grants
  • Student the institution doesn’t maintain a separate financial account for and whose qualified tuition and related expenses are covered by a formal billing arrangement with the student’s employer or a government agency, such as the Department of Veterans Affairs or the Department of Defense

Q19. I didn’t receive a Form 1098-T because my school isn’t required to provide it to me for 2024 or my school closed and didn’t give it to me. Can I still claim an education credit for tax year 2024? (updated Jan. 10, 2025)

A19. Yes. You can still claim AOTC if you didn’t receive a Form 1098-T because the school isn’t required to provide it or the school closed and didn’t provide it if:

  • Student or person able to claim the student as a dependent meets all other eligibility requirements to claim AOTC
  • Student can show they were enrolled at an eligible educational institution
  • You can substantiate payment of qualified tuition and related expenses

Keep records that show student enrollment and the amount of paid qualified tuition and related expenses. You may need to send copies if we contact you regarding your AOTC claim.

Q20. How do I know if my school is an eligible educational institution?

A20. See What is an eligible educational institution.

Q21. I received a letter from the IRS questioning my AOTC claim. What should I do? (updated Jan. 10, 2025)

A21. If you receive an IRS letter or are audited by the IRS, it can be because we didn’t receive a Form 1098-T or need information to support the amounts of qualified tuition and related expenses reported on Form 8863.

If you received a Form 1098-T, review it to make sure the student’s name and Social Security number are correct. If either is incorrect, contact the school to correct the information for future 1098-T reporting.

If the student didn’t receive a Form 1098-T but should have, contact the school for a copy.

Some eligible educational institutions aren’t required to provide a Form 1098-T (see Q&A 18 for exceptions).

If you claimed expenses that weren’t reported on Form 1098-T, Box 1 as amounts paid, send us copies of receipts, cancelled checks or other documents as proof of payment. Check your letter for instructions.

If you don't have a letter, see Forms 886-H-AOC and 886-H-AOC-MAX for examples. Form 886-H-AOC is also available in Spanish. Search for forms.

Q22. Can students with an F-1 visa claim AOTC?

A22. For most students present in the U.S. on an F-1 student visa the answer is no. Generally, the time an alien spends studying in the U.S. on an F-1 Visa doesn't count in determining whether they’re a resident alien under the substantial presence test. See U.S. Tax Guide for Aliens, Pub. 519.

Q23. I’m a nonresident alien. Can I claim an education tax credit?

A23. Generally, a nonresident alien can’t claim an education tax credit unless they’re:

  • Married and choose to file a joint return with a U.S. citizen or resident spouse
  • Dual-status alien and choose to be treated as a U.S. resident for the entire year

See U.S. Tax Guide for Aliens, Pub. 519.

Q24. What should I do if the student’s return was incorrectly prepared and filed by a professional tax preparer? (updated Jan. 10, 2025)

A24. You’re legally responsible for what’s on your return, even if someone else prepares it. We urge you to choose a tax preparer wisely. See Choosing a tax professional.

Q25. Are there any other education tax benefits?

A25. Yes, see Tax benefits for education – Information center.

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Page Last Reviewed or Updated: 04-Sep-2025