A deduction reduces the amount of your income that is subject to tax, thus generally reducing the amount of tax you may have to pay.

A tax credit reduces the amount of income tax you may have to pay.

Tax credits, deductions and savings plans can help taxpayers with their expenses for higher education. Review the AOTC and Publication 519, U.S.

There are additional requirements for foreign students and dependents who have an ITIN.

You can use the IRS’s Interactive Tax Assistant tool to help determine if you’re eligible for educational credits or deductions, including the American Opportunity Tax Credit (AOTC) or the Lifetime Learning Credit (LLC).

See Publication 970 for information on what to do if you receive a refund of qualified education expenses during the tax year. You can claim the credits for any amounts not refunded if the student withdraws. What if the Student Withdraws from Classes? You must reduce the amount of expenses paid with tax-free grants, scholarships and fellowships and other tax-free education help.

You cannot claim a credit for education expenses paid with tax-free funds. Expenses Cannot Be Paid with Tax-Free Funds For schools that use clock or credit hours and do not have academic terms, the payment period may be treated as an academic period. Academic periods are determined by the school. Academic periods can be semesters, trimesters, quarters or any other period of study such as a summer school session. You must pay the qualified education expenses for an academic period that starts during the tax year or the first three months of the next tax year. For the Lifetime Learning Credit, you can qualify if you take the course to acquire or improve your job skills. You must pay the expenses for higher education that result in a degree or other recognized education credential. For the Lifetime Learning Credit only, these expenses qualify if the course helps the student acquire or improve job skills. Sports, games, hobbies or non-credit courseĮxpenses for sports, games, hobbies or non-credit courses do not qualify for the education credits or tuition and fees deduction, except when the course or activity is part of the student’s degree program. Similar personal, living or family expenses.Medical expenses (including student health fees).Expenses that Do Not QualifyĮven if you pay the following expenses to enroll or attend the school, the following are not qualified education expenses: See our Education Credits Frequently Asked Questions page for more information. For example, the cost of a required course book bought from an off-campus bookstore is a qualified education expense. For example, an activity fee that all students are required to pay to fund all on-campus student organizations and activities.įor AOTC only, expenses for books, supplies and equipment the student needs for a course of study are included in qualified education expenses even if it is not paid to the school. You must pay the expenses for an academic period* that starts during the tax year or the first three months of the next tax year.Įligible expenses also include student activity fees you are required to pay to enroll or attend the school. Qualified expenses are amounts paid for tuition, fees and other related expense for an eligible student that are required for enrollment or attendance at an eligible educational institution. Qualified Education Expenses for Education Credits If you pay the expenses with money from a loan, you take the credit for the year you pay the expenses, not the year you get the loan or the year you repay the loan. You can claim an education credit for qualified education expenses paid by cash, check, credit or debit card or paid with money from a loan. A third party including relatives or friends.A student you claim as a dependent on your return, or.

You or your spouse if you file a joint return,.Who Must Pay Qualified education expenses must be paid by: Qualified education expenses are amounts paid for tuition, fees and other related expenses for an eligible student.

Qualified education expenses computer