Life events and tax benefits for education


Notice: Historical Content

This is an archival or historical document and may not reflect current law, policies or procedures.

August 20, 2020

Has a life event caused a disruption in your post-secondary education pursuits? Are you taking more of your courses on-line instead of in-person? Are you delaying your educational goals?

Don't forget to consider claiming the American opportunity tax credit (AOTC) even when life events happen and when you restart your education. Tax credits for education such as the AOTC can still help you pay qualified education expenses for an eligible student even if there's a pause in educational goals, or courses were taken on-line. AOTC may reduce your tax up to $2,500 per eligible student and up to $1,000 may be refunded to you even if you're not required to file a tax return.

A student can only be claimed for AOTC for four tax years. However, the years don't have to be consecutive and courses can be taken on-line.

To be eligible for AOTC, the student must:

  • Be pursuing a degree or other recognized education credential
  • Be enrolled at least half time for at least one academic period*beginning in the tax year
  • 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
  • Not have a felony drug conviction at the end of the tax year

*Academic Period can be semesters, trimesters, quarters or any other period of study such as a summer school session. The schools determine the academic periods. For schools that use clock or credit hours and do not have academic terms, the payment period may be treated as an academic period.

If you don't qualify for AOTC, there are other education benefits to consider such as the Lifetime Learning Credit and the Tuition and Fees Deduction. See Publication 970, Tax Benefits for Education, for more information on these and other education tax benefits.