Education Credits: AOTC & LLC
An education credit can help reduce the cost of higher education by reducing the amount of tax owed on your tax return. In some cases, if the credit reduces your tax to less than zero, you may even receive a refund. There are two education credits available: the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC).
Who Can Claim an Education Credit?
To be eligible for either the AOTC or LLC, you must meet the following criteria:
- You, your dependent, or a third party must have paid qualified education expenses for higher education.
- The eligible student must be enrolled at an eligible educational institution.
- The eligible student can be yourself, your spouse, or a dependent listed on your tax return.
Who Cannot Claim an Education Credit?
There are certain situations where you cannot claim an education credit. These include:
- If someone else, such as your parents, lists you as a dependent on their tax return.
- If your filing status is married filing separately.
- If you have already claimed or deducted another higher education benefit using the same student or expenses. (Refer to Education Benefits: No Double Benefits Allowed for more information)
- If you (or your spouse) were a non-resident alien for any part of the year and did not choose to be treated as a resident alien for tax purposes. (Refer to Publication 519, U.S. Tax Guide for Aliens for more information)
Comparing the Education Credits
While the AOTC and LLC are both education credits, they have some similarities and important differences. To determine which credit you qualify for, refer to our handy chart comparing the education credits.
More Information about the American Opportunity Tax Credit
To learn more about the American Opportunity Tax Credit, visit our page dedicated to providing detailed information about this credit.
More Information about the Lifetime Learning Credit
To learn more about the Lifetime Learning Credit, visit our page dedicated to providing detailed information about this credit.
Interactive App: "Am I Eligible to Claim an Education Credit?"
Our interactive app, "Am I Eligible to Claim an Education Credit?", can help you determine if you are eligible for education credits and deductions. Use this tool to ensure you are taking advantage of all available benefits.
What to Do If You Receive a Letter from the IRS or Get Audited
It is important to know your rights as a taxpayer and be familiar with the IRS's obligations to protect them. Familiarize yourself with the Taxpayer Bill of Rights, which informs you of your rights during every step of your interaction with the IRS.
If you receive a letter or are audited by the IRS, it may be because the IRS did not receive a Form 1098-T (Tuition Statement) verifying the student's enrollment, or they may need additional information to support the amounts of qualified expenses you reported on Form 8863. Review your Form 1098-T to ensure the student's name and social security number are correct. If there are any discrepancies, contact the school to correct the information for future 1098-T reporting. If the student should have received a Form 1098-T but did not, contact the school for a copy. Please note that there are exceptions where educational institutions are not required to furnish Form 1098-Ts.
If you claimed expenses that were not reported on the Form 1098-T in Box 1 as amounts paid, or if your school reported the amount you were charged for qualified expenses in Box 2, you will need to provide proof. Send copies of paid receipts, cancelled checks, or other documents as evidence. Refer to the letter you received for further instructions on what documents to send. If you do not have the letter, visit our page "Forms 886 May Help You" for examples. Form 886-H-AOC and Form 886-H-AOC-MAX are available as examples, and Form 886-H-AOC is also available in Spanish.
Audit and Examination Process
The IRS selects income tax returns for examination based on computer programs that identify returns with incorrect amounts. The examination may or may not result in a change to your tax or credits. For more information on the examination process, refer to Publication 3498-A, "The Examination Process (Examinations by Mail)" and Publication 556, "Examination of Returns, Appeal Rights, and Claims for Refund".
For any additional information, please visit the Internal Revenue Service website.