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Frequently Asked Tax Questions

Child Care Credit, Other Credits - Education Credits

  1. How is the amount of an education credit determined?
  2. What expenses qualify for an education credit?
  3. Do tuition and related expenses paid to attend a private high school qualify for an education credit?
  4. Can I claim an education credit if my filing status is married filing separately?
  5. If I pay college tuition and fees with a tax-free scholarship, can I claim an education credit on Form 8863 for those payments?
  6. If the amount of my qualified tuition and related expenses is greater than the amount of my scholarship, may I claim the excess expenses on Form 8863?
  7. Can I claim an education credit for higher education expenses paid by a government-subsidized loan?
  8. Who can claim the American opportunity credit?
  9. What is the lifetime learning credit?
  10. Who can claim the lifetime learning credit?
  11. Is an education credit available for the cost of a high school student taking college classes before graduation from high school?

Rev. date: 12/18/2014

How is the amount of an education credit determined?

The amount of an education credit is based on the following:
The amount of an education tax credit for each eligible student is subject to a phaseout.   
You must use Form 8863 (.pdf), Education Credits (American Opportunity and Lifetime Learning Credits), to calculate and claim an education credit.

Rev. date: 12/18/2014

What expenses qualify for an education credit?

There are two tax credits available to help you offset the costs of higher education by reducing the amount of your income tax. They are:
Expenses that qualify for an education credit are qualified tuition and related expenses paid by the taxpayer during the taxable year. Qualified tuition and related expenses are tuition and fees required for the enrollment or attendance of the taxpayer, the taxpayer's spouse, or any dependent of the taxpayer at an eligible educational institution for courses of instruction.  
An eligible educational institution means a college, university, vocational school, or other postsecondary educational institution that is accredited and eligible to participate in the federal financial student aid programs administered by the Department of Education.
Qualified tuition and related expenses do not include the following types of expenses:
The American Taxpayer Relief Act extends through 2017 the enhanced provisions of the American Opportunity Tax Credit (AOTC), which is a temporary version of the original Hope Scholarship Credit.   
For the AOTC provisions, student activity fees are included in qualified education expenses only if the fees must be paid to the institution as a condition of enrollment or attendance. Expenses for books, supplies and equipment needed for a course of study are included in qualified education expenses whether or not the materials are purchased from the educational institution.
For the permanent Lifetime Learning Credit, student activity fees and expenses for course-related books, supplies and equipment are included in qualified education expenses only if the fees and expenses must be paid to the institution for enrollment or attendance by an eligible student.

Rev. date: 12/18/2014

Do tuition and related expenses paid to attend a private high school qualify for an education credit?

No. Expenses paid to attend a private high school do not qualify for an education credit because a high school is not an eligible educational institution.
In general, an eligible educational institution is an accredited college, university, vocational school, or other postsecondary educational institution. In addition, the educational institution must be eligible to participate in a federal financial student aid program administered by the Department of Education to be considered an eligible educational institution.

Rev. date: 12/18/2014

Can I claim an education credit if my filing status is married filing separately?

No, an individual with a filing status of married filing separately may not claim an education credit.

Rev. date: 12/18/2014

If I pay college tuition and fees with a tax-free scholarship, can I claim an education credit on Form 8863 for those payments?

No, you cannot claim a credit for higher education expenses paid for by a tax-free scholarship.

Rev. date: 12/18/2014

If the amount of my qualified tuition and related expenses is greater than the amount of my scholarship, may I claim the excess expenses on Form 8863?

Yes, fill out Form 8863 (.pdf), Education Credits (American Opportunity and Lifetime Learning Credits).

Rev. date: 12/18/2014

Can I claim an education credit for higher education expenses paid by a government-subsidized loan?

Yes, higher education expenses paid with the proceeds of a government-subsidized loan may qualify for the credit if you must repay the loan. Additionally, you claim the credit in the year in which you pay the expenses, not in the year in which you repay the loan.

Rev. date: 12/18/2014

Who can claim the American opportunity credit?

The American opportunity credit modifies the Hope Scholarship credit for any tax years beginning in 2009 through 2017. The maximum amount of the credit is $2,500 and 40% of the Hope credit is refundable (up to $1,000). You may claim the Hope Scholarship credit if:
In general, qualified tuition and related expenses means tuition, fees and course materials required for the enrollment or attendance of you, your spouse or your dependent with respect to whom you are allowed a deduction, at an eligible educational institution.  
An eligible student is a student who:

Rev. date: 12/18/2014

What is the lifetime learning credit?

The lifetime learning credit is a nonrefundable tax credit with a per family dollar limit that is available for qualified tuition and related expenses of higher education, whether the student is at the undergraduate or graduate level.
You calculate the lifetime learning credit by taking 20% of the first $10,000 of the qualified educational expenses paid for all eligible students.

Rev. date: 12/18/2014

Who can claim the lifetime learning credit?

Generally, you can claim the lifetime learning credit if you meet the following requirements:
You cannot claim the lifetime learning credit if any of the following applies:

Rev. date: 12/18/2014

Is an education credit available for the cost of a high school student taking college classes before graduation from high school?

Yes, if they otherwise qualify. The fact that a student has not graduated from high school does not necessarily disqualify the student from claiming a credit if for purposes of the American opportunity credit, the student is also enrolled at least half-time in a postsecondary education program leading to a degree, certificate or other recognized educational credential for at least one academic period at an eligible educational institution during the tax year.  
For purposes of the lifetime learning credit, a credit can be taken for any qualified educational expenses paid for a student who is enrolled in one or more courses at an eligible educational institution to acquire or improve job skills.