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Education Credits--AOTC and LLC

An education credit helps with the cost of higher education by reducing the amount of tax owed on your tax return. If the credit reduces your tax to less than zero, you may get a refund. There are two education credits available: the American Opportunity Tax Credit and the Lifetime Learning Credit.

Don’t overlook these important credits.

Who can claim an education credit?

There are additional rules for each credit, but you must meet all three of the following for both:

  1. You, your dependent or a third party pays qualified education expenses for higher education.
  2. An eligible student must be enrolled at an eligible educational institution.
  3. The eligible student is yourself, your spouse or a dependent you list on your tax return.

Who cannot claim an education credit?

You cannot claim an Education Credit when:

  • Someone else, such as your parents, list you as a dependent on their tax return
  • Your filing status is married filing separately
  • You already claimed or deducted another higher education benefit using the same student or same expenses (see Education Benefits: No Double Benefits Allowed for more information)
  • You (or your spouse) were a non-resident alien for any part of the year and did not choose to be treated as a resident alien for tax purposes (find more information in Publication 519, U.S. Tax Guide for Aliens)

Compare the education credits and tuition and fees deduction

The education credits and the deduction have some similarities but some very important differences. Find out which credit or deduction you qualify for, see our handy chart to compare the education credits and the tuition and fees deduction.

Use our interactive app

Our interactive app, "Am I Eligible to Claim and Education Credit?" helps you determine if you are eligible for education credits and deductions.

What should I do if I receive a letter from the IRS or I’m audited?

Taxpayer rights

You will benefit from knowing your rights as a taxpayer and being familiar with the IRS's obligations to protect them. The goal of the Taxpayer Rights Corner is to inform you of your rights during every step of your interaction with the IRS.

Did you receive a letter?

You may have received the letter because the IRS did not receive a Form 1098-T, Tuition Statement, or the educational institution (college) did not prepare the Form 1098-T accurately. If the Form 1098-T is wrong or you never received it, contact the school to request a copy or corrected copy for that year.

Reply to any IRS correspondence to get the education credits you deserve. Find information on Understanding Your IRS Notice here. Find IRS notices listed by the number here.

Audit and examination process

IRS selects income tax returns for examination identified by computer programs showing a return has incorrect amounts. The examination may or may not result in a change to your tax or credits.

Use the following links for additional information:

Pub 3498-A, The Examination Process (Examinations by Mail) (PDF)
Pub 556, Examination of Returns, Appeal Rights, and Claims for Refund (PDF)  

 

Find information for tax return preparers, schools, community and social organizations on our Refundable Credits Toolkit 

Tax Benefits for Education: Information Center

The Tax Benefits for Education: Information Center  has  information on other education benefits--deductions, savings plans and business or work-related education expenses.

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 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: 28-Mar-2014