There are two tax credits available to individuals who pay expenses for higher (post-secondary) education. They are:
- The American Opportunity Credit, and
- The Lifetime Learning Credit
Can you claim more than one education credit this year?
For each student, you can choose for any year only one of the credits. For example, if you choose to take the American Opportunity Credit for a child on your 2020 tax return, you cannot, for that same child, also claim the Lifetime Learning credit for 2020.
If you are eligible to claim the American Opportunity Credit and you are also eligible to claim the Lifetime Learning Credit for the same student in the same year, you can choose to claim either credit, but not both.
- Based on the information in your return, our program will recommend the better of the two education credits.
If you pay qualified education expenses for more than one student in the same year, you can choose to take the American Opportunity and the Lifetime Learning credits on a per-student, per-year basis. This means you can claim the American Opportunity Credit for one student and the Lifetime Learning Credit for another student in the same year.
Who Can Claim an Education Credit?
You may be able to claim an education credit if you, your spouse, or a dependent you claim on your tax return was a student enrolled at or attending an eligible educational institution and received a 1098-T form. The credits are based on the amount of qualified education expenses paid for the student in 2020 for academic periods beginning in 2020 and in the first 3 months of 2021.
For example, if you paid $1,500 in December 2020 for qualified tuition for the spring 2021 semester beginning in January 2021, you may be able to use that $1,500 in figuring your 2020 education credit(s).
An academic period includes a semester, trimester, quarter, or other period of study (such as a summer school session) as reasonably determined by an educational institution. In the case of an educational institution that uses credit hours or clock hours and does not have academic terms, each payment period can be treated as an academic period.
Eligible educational institution:
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. It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) post-secondary institutions. The educational institution should be able to tell you if it is an eligible educational institution.
Certain educational institutions located outside the United States also participate in the U.S. Department of Education's Federal Student Aid (FSA) programs.
Who can claim a dependent's expenses:
Generally, qualified education expenses paid on behalf of the student by someone other than the student (such as a relative) are treated as paid by the student. However, qualified education expenses paid (or treated as paid) by a student who is claimed as a dependent on your tax return are treated as paid by you. Therefore, you are treated as having paid expenses that were paid from your dependent student's earnings, gifts, inheritances, savings, etc.
If a student is claimed as a dependent on another person's tax return, only the person who claims the student as a dependent can claim a credit for the student's qualified education expenses. If a student is not claimed as a dependent on another person's tax return, only the student can claim a credit.
What is covered?
The credit is based on qualified education expenses you pay for yourself, your spouse, or a dependent you claim an exemption for on your tax return. Generally, the credit is allowed for qualified education expenses paid in 2020 in connection with enrollment at an institution of higher education during 2020 or for an academic period beginning in 2020 or in the first 3 months of 2021. The eligible educational institution must have issued a 1098-T with an amount in Box 1 to claim a credit.
For purposes of this credit, qualified education expenses are tuition and certain related expenses required for enrollment or attendance at an eligible educational institution.
Who cannot claim a credit?
You cannot take an education credit if any of the following apply:
- You are claimed as a dependent on another person's tax return, such as your parent's return.
- Your filing status is married filing separately.
- You (or your spouse) were a nonresident alien for any part of 2019 and did not elect to be treated as a resident alien for tax purposes.
- Your Modified Adjusted Gross Income (MAGI) is one of the following:
American Opportunity Credit: $180,000 or more if married filing jointly, or $90,000 or more if single, head of household, or qualifying widow(er).
Lifetime Learning Credit: $138,000 or more if married filing jointly, or $69,000 or more if your single, head of household, or qualifying widow(er).
To enter the education credit into your account, Log in and go to:
- Federal Section
- Select My Forms
- Credits Menu
- Education Credits Form 1098-T