Single Stop Tax Preparation: Education Tax Credits

The American Opportunity Tax Credit and the Lifetime Learning Credit are two tax credits for people who pay expenses for college, and may help get money in your pocket to help with education and living expenses.

Continue reading to see if you qualify!


You can receive the American Opportunity Tax Credit (AOTC) if you meet all of these requirements:

 Your tax household contains a student enrolled in an eligible institution of higher learning at least half-time for at least one academic period during the tax year.
 The student is in the first four years of his or her post-secondary education.

 The student is pursuing a degree or other recognized educational credential.

 The student does not have any felony drug convictions as of the end of the tax year.
You can receive the Lifetime Learning Credit (LLC) if you meet all of these requirements:

 Your tax household contains a student enrolled in an eligible institution of higher learning in at least one course.

 The student is in any year of his or her post-secondary education or enrolled in a course to acquire or improve job skills.

Additionally, for both Education Credits, you must meet all of these requirements:

 The student has qualified expenses during at least one academic period in the tax year and/or the first 3 months of the next year. If the student’s education expenses are covered by grants and scholarships such as Pell, the student will need to claim the grants as income covering living expenses when filing a tax return to claim an Education Credit.
 The student (or his/her spouse) is a U.S. citizen or a resident alien for whole tax year or chooses to be treated as a resident for tax purposes.
 The student is not claimed as a dependent on another person’s tax return (other than the person claiming the credit, if applicable).
 Married couples must file jointly.
If you are eligible to claim both credits for the same student, you cannot claim both, and must choose which one is better for you. You can, however, claim both credits on your tax return for different students.

For a side-by-side comparison of AOTC and LLC eligibility rules, view educompchart.


Education Tax Credits & Other Benefits
If you do not pay tuition because you receive a Pell Grant, you may still receive a credit if Pell is counted as income.
While filing taxes, you may choose whether to claim all or part of Pell as income or whether to apply it all toward
qualified education expenses.

Even if the student’s school applied the grant to tuition and fees, you may still claim it as income covering the student’s non-qualified expenses such as living expenses and transportation. You may be able to increase the value of your education credit and therefore reduce the amount of taxes you owe or increase your refund if you choose to include all or part of Pell in your income. For more information, see IRS Publication 970 (http://www.irs. gov/pub/irs-pdf/p970.pdf) or speak with Single Stop.

Qualified expenses are tuition, fees, and course materials required for enrollment. Course-related books, supplies, and equipment need to be purchased from the institution in order to qualify for the LLC, but they do not for the AOTC.

An eligible educational institution is any college, university, vocational school, or other post-secondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education.

Single Stop also offers free tax preparation services. To find out more, contact your Single Stop Office or click the image to schedule an appointment.