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Education Benefits -- No Double Benefits Allowed

You can’t take more than one education benefit for the same student and the same expenses. So, you can't take the AOTC and LLC for the same student in the same tax year. Also, if you receive tax-free educational assistance, such as a grant, you need to subtract that amount from your qualified education expenses.

 

Adjustments to qualified education expenses

(This brief description of adjusting educational expenses is a broad overview. If you or your student  fall under any of the listed categories, we suggest you consult Publication 970, Tax Benefits for Education, for more information)

Generally, for each student, you:

  1. Take the total amount of qualified education expenses paid for the student
  2. Subtract the amount of tax-free educational assistance the student received
  3. Use any remaining qualified education expenses to claim an education credit.

Examples of tax-free educational assistance include:

  • Tax-free parts of scholarships and fellowships
  • Pell grants and other need-based education grants
  • Employer-provided educational assistance
  • Veterans' educational assistance
  • Any other tax-free payments (other than gifts or inheritances) received as educational assistance

What Funds Do Not Reduce My Qualified Education Expenses?

You don’t need to reduce your qualified education expenses by amounts paid with the following:

  • Payments for services, such as wages
  • Money from loans
  • Gifts
  • Inheritances
  • Student's personal savings
  • Scholarships or fellowships reported as income on the student's tax return when:
    • The terms of the scholarship or fellowship restrict the use of the money to costs of attendance that are not for qualified education expenses (such as room and board)
    • The use of the money is not restricted and may be used for qualified expenses or not qualified expenses

See Publication 970,Tax Benefits for Education, for examples of reporting scholarships or fellowships as income.

Finding the Best Education Benefit for You

We want you to take the education benefit that helps you the most. Generally, a credit that reduces your tax or increases your refund is the best. Look at all your options and see what helps you the most. 

 

Also, you can consider including a tax-free scholarship, fellowship or grant to your student’s income and then taking the full amount of the education credit. Refer to Publication 970, Tax Benefits for Education,, for more information.

 

Use our interactive app to help you find out if you can claim an education credit or the Tuition and Fees deduction-- Am I Eligible to Claim an Education Credit?

Refund of Qualified Education Expenses

See Publication 970, Tax Benefits for Education for information on what to do if you receive a refund of qualified education expenses during the tax year.


Return to Education Credits- AOTC and LLC home page

 

 

 

Information for Tax Professionals, Schools, Community and Social Organizations on our Refundable Credits Toolkit 

Watch out for these common errors made when claiming education credits

  • Students listed as a dependent or spouse on another tax return
  • Students who don’t have a Form 1098-T showing they attended an eligible educational institution
  • Students who are not paying qualified education expenses
  • Claiming the credit for a student not attending a college or other higher education

Find the answers to the questions you ask about the education credits

See both Education Credits:  Questions and Answers and
Education Credits Frequently Asked Questions

More education benefit resources

 

Technical Forms and Publications

 

 

 

Page Last Reviewed or Updated: 12-Dec-2014