Education Education Tax Credit: Back-to-School Tax Savings & Deductions Read the Article Open Share Drawer Share this:Click to share on Facebook (Opens in new window)Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Pinterest (Opens in new window)Click to print (Opens in new window) Written by TurboTaxBlogTeam Published Aug 16, 2023 - [Updated Jul 1, 2024] 5 min read Reviewed by Katharina Reekmans, Enrolled Agent School tuition and related fees, especially paying for college and a postgraduate degree, can be expensive. However, the tax code provides some relief via education tax credits and deductions to combat the ever-increasing price of these costs. You may be able to deduct qualified expenses paid during the year for yourself, your spouse, or your dependent. Federal education tax deductions and credits focus on postsecondary education. If you have a child between kindergarten and high school, you may have to check with your state to find other benefits or financial aid options. For now, let’s focus on higher education and how paying for undergraduate, graduate, professional degrees and courses to improve or acquire job skills might impact your taxes. Table of Contents Education Tax Credits ExplainedTop Education Tax CreditsEducation Tax Deductions and ExpensesTake Advantage of Your Education Education Tax Credits Explained Any education credit helps reduce the amount owed on your tax return. That means they don’t directly pay your education expenses or student loan interest; instead, they take into account that you’re paying these fees and give you “tax breaks.” Here’s the background on education credits: Eligibility Criteria According to the Internal Revenue Service (IRS), not everyone is eligible to claim an education credit. You must be able to check all of these boxes: You, your dependent or a third party pay qualified expenses. The student is enrolled at an eligible educational institution. The student is you, your spouse or a dependent on your tax return. Qualified Expenses A qualified educational expense can be anything from tuition to required campus fees. Depending on the credit you claim, you may be able to include the cost of books, supplies and equipment, too. These expenses qualify whether you pay for them with cash/check/card or a loan. Qualified Educational Institutions A student needs a Form 1098-T showing they attend a qualifying college. Most accredited institutions count, such as public, nonprofit, and privately-owned for-profit schools. This includes: Colleges. Universities. Trade schools. Postsecondary educational programs. Top Education Tax Credits The two education tax credits available are the American Opportunity Tax Credit and the Lifetime Learning Credit. American Opportunity Tax Credit The American Opportunity Tax Credit (AOTC) is available to a large number of taxpayers. To claim the full credit, your modified adjusted gross income (MAGI) must be $80,000 or less (or $160,000 or less if you’re married filing jointly). You will receive a reduced amount of the credit if your MAGI is over $80,000 but more than $90,000 individually (over $160,000 but less than $180,000 married filing jointly). You can get a maximum credit of $2,500 for each qualifying student. To be a qualifying student to claim AOTC, the student must meet the following criteria: Be enrolled at least half-time for a minimum of one academic period beginning in that tax year. An academic period could be a semester, trimester, quarter, or even a summer school session. Pursue a degree or some recognized education credential if they want to claim this credit. Be in the first four years of higher education. Not have claimed this credit (or the former Hope credit) for more than four tax years. Cannot have a felony drug conviction at the end of the tax year. The credit is calculated based on a maximum of the first $4,000 worth of qualified education expenses per eligible student. The amount of credit is 100% of the first $2,000 you spend on qualified education expenses you paid for each eligible student. For the next $2,000 you spend on qualified education expenses, 25% is covered by the AOTC credit for a maximum total credit of $2,500. This applies to each eligible student — so if you’re a parent with multiple kids in college, you can claim the credit for each one. Better yet, part of this tax credit is refundable, meaning it can actually pay you by increasing your tax refund. If the credit brings your taxes owed down to zero, you can get 40% of any remaining amount of the credit added to your refund up to $1,000. Tip: Remember that you may be able to claim this credit for up to four tax years for each different student as long as it’s for different eligible education expenses. That’s one more reason it’s helpful to keep track of your paperwork, especially Forms 1098-E and 1098-T. Lifetime Learning Tax Credit Unlike the American Opportunity Tax Credit, you can claim the Lifetime Learning Credit for as many years as you pay qualifying expenses for undergraduate, graduate, professional degree courses and courses to improve or acquire job skills. While there is no limit on the number of years you can claim this credit on your tax return, it is worth up to $2,000 per tax return. Tip: While you can claim both of these tax credits on the same tax return, it can not be for the same student or the same qualified expenses. TurboTax will help you determine which education credits you qualify for depending on your tax situation. Education Tax Deductions and Expenses Although education tax credits are a golden opportunity to get a break from those college fees, you have other options, too — especially when it comes to loans and interest. Here are a few tax breaks you might qualify for: Student Loan Interest Deduction The federal government allows you to deduct up to $2,500 of the interest you repaid on your student loans. Better yet, you can do that each year. You’re only eligible for the deduction if your modified adjusted gross income (MAGI) is less than $90,000 for single filers and less than $185,000 if married filing joint. You will not be able to qualify for a student loan interest deduction if you are married and filing separately. Tip: Keep good records of all your expenses and spending over the tax year. This makes it easier to get the credits you deserve. Tuition Reimbursement If you’re a student with a job, you might have a leg up. Ask your employer if you are eligible for tuition reimbursement from your company. Take Advantage of Your Education Pursuing postsecondary education is a big step — and often a pricey one. Fortunately, you can take qualified tuition and related expenses down a peg with a few well-chosen credits, deductions and tax breaks. Previous Post Four Tax Tips for Teachers Next Post Writing Off Your Summer: Preparing For Next Tax Season Written by TurboTaxBlogTeam More from TurboTaxBlogTeam 172 responses to “Education Tax Credit: Back-to-School Tax Savings & Deductions” « Older Comments Newer Comments » Great timing Reply My son start. ted trade school in Sept. he took out at student loan to pay for it. Can he claim the full tuition as under credit this year? Reply If his expenses and his school qualify, he can get the credit even though he borrowed the money to pay for his tuition. If he could be a dependent on your tax return, you will get the credit if your income isn’t too high. For more information: http://www.irs.gov/uac/Tax-Benefits-for-Education:-Information-Center Thank you, Mary Ellen Reply We are paying our granddaughter’s college expenses which include tuition and room and board. She is not a dependent of ours. Can we claim a tax credit? Reply According to IRS Publication 970 – Tax Benefits for Education, “Someone other than you, your spouse, or your dependent (such as a relative or former spouse) may make a payment directly to an eligible educational institution to pay for an eligible student’s qualified education expenses. In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. If you claim an exemption on your tax return for the student, you are considered to have paid the expenses.” For more information: http://www.irs.gov/uac/Tax-Benefits-for-Education:-Information-Center Thank you, Mary Ellen Reply I paid a portion of tuition from my traditional IRA, are there any tax breaks or exemptions on the early withdrawal tax law? Reply Hi Latoya, There are no exceptions to the penalty rules for early withdrawal from an IRA for education purposes, but you may still qualify for the education credits for deductions. Here is more information: http://www.irs.gov/uac/Tax-Benefits-for-Education:-Information-Center Thank you, Mary Ellen Reply I have a few Q’s. 1.) I’m an independent contractor (who’s working under a W9) and the gentleman I’m working for is going to send me a 1099 form at the end of the year. Does Turbo Tax have a section for this form? 2.) If so, will I need any other documentation when filling this section out on Turbo Tax? (I ask because I will be out if the country when I do my taxes this year). 3.) Lastly, will there be any issues with me filling out/submitting my taxes on Turbo Tax if I’m outside of the U.S? Thanks for your time Reply Hi David, TurboTax has a section for entering income from a 1099-MISC. It is called self-employed or business income. If you have any expenses or supplies you use specifically for this income, you will be able to deduct those expenses. You should be able to access TurboTax.com from any where in the world if you have an internet connection. You can find additional information abou filing taxes when you are outside the US at http://www.irs.gov/Individuals/International-Taxpayers/U.S.-Citizens-and-Resident-Aliens-Abroad—Automatic-2-Month-Extension-of-Time-to-File Thank you, Mary Ellen Reply Do you have to spend over $4000 to get the credit? Reply Hi Rebecca, No, you don’t have to spend over $4000 to get the credit. Your credit will be based on the actual amount of qualified expenses you have. Here is more information: http://www.irs.gov/uac/Tax-Benefits-for-Education:-Information-Center Thank you, Mary Ellen Reply I tried this site, and the part where i put in my info. It stated I do not qualify. I need to know if MY dependent does? I have paid over $1000 for his expenses this semester alone. He has put over 4,800 miles on his car for travel JUST for his college back and forth to home for fall semester. Isn’t there a travel credit somewhere? Hi, my son stared working part time this March (2013) he pays for his education (tuition ,books, fees) But he’s still live at home with both parents, so we pay rent and bill’s Does he has to do he’s own taxes? And can we claim him as a dependent? transportation (gas) can be added as school expense? Thanks Reply Hi Ralip. Whether you can claim your son as a dependent will be dependent on his age and whether or not he provides more than half of his own support. The IRS has a helpful calculator to determine who should claim him. http://www.irs.gov/uac/Who-Can-I-Claim-as-a-Dependent%3F Whoever claims him will claim his education expense deduction or credit. Transportation is not considered a qualified education expense for the education credits or deduction. Here is more information: http://www.irs.gov/uac/Tax-Benefits-for-Education:-Information-Center Thank you, Mary Ellen Reply Can both myself and my son qualify for tax credit if he paid for the Fall semester 2013 and I paid for the Spring semester 2013? Reply Hi Cathy, Only one of you can claim the tax credit, but not both depending on whether your son claims an exemption for himself or if you claim him as a dependent. If you claim him as a dependent, then you would get the credit. If your son claims himself then he would get the tax credit. Thank you, Lisa Greene-Lewis Reply If I paid tuition$4,000 to a private online school, that I will receive a certificate, does this count? And which credit wold I receive? Or does it have to be a college? Reply Hi Dina, There are requirements the school must meet in order for you to receive the credit or deduction. You can check with the main office of your school to see if they qualify. For more answers on education tax benefits go to: http://www.irs.gov/uac/Tax-Benefits-for-Education:-Information-Center Thank you, Mary Ellen Reply If u are part time but still undergrad and have been going over 4 years, can u still get the TAX CREDIT? Reply Hi Jessica, After 4 years, you can qualify for the Lifetime Learning Credit or the Tuition and Fees deduction, even if you are a part time student. Here is more information http://www.irs.gov/uac/Tax-Benefits-for-Education:-Information-Center Thank you, Mary Ellen Reply « Older Comments Newer Comments » Leave a ReplyCancel reply Browse Related Articles Income Tax by State Indiana State Income Tax in 2025: A Guide Income Tax by State Arkansas State Income Tax in 2025: A Guide Income Tax by State Kansas State Income Tax in 2025: A Guide Income Tax by State North Carolina State Income Tax in 2025: A Guide Education Back-to-School Savings: Tax Tips for Parents and Students Income Tax by State Arizona State Income Tax in 2025: A Guide Business Taxes How to Deduct Business Expenses & What You Can Write Off Income Tax by State Kentucky State Income Tax in 2025: A Guide Income Tax by State Louisiana State Income Tax in 2025: A Guide Income Tax by State Maine State Income Tax in 2025: A Guide
My son start. ted trade school in Sept. he took out at student loan to pay for it. Can he claim the full tuition as under credit this year? Reply
If his expenses and his school qualify, he can get the credit even though he borrowed the money to pay for his tuition. If he could be a dependent on your tax return, you will get the credit if your income isn’t too high. For more information: http://www.irs.gov/uac/Tax-Benefits-for-Education:-Information-Center Thank you, Mary Ellen Reply
We are paying our granddaughter’s college expenses which include tuition and room and board. She is not a dependent of ours. Can we claim a tax credit? Reply
According to IRS Publication 970 – Tax Benefits for Education, “Someone other than you, your spouse, or your dependent (such as a relative or former spouse) may make a payment directly to an eligible educational institution to pay for an eligible student’s qualified education expenses. In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. If you claim an exemption on your tax return for the student, you are considered to have paid the expenses.” For more information: http://www.irs.gov/uac/Tax-Benefits-for-Education:-Information-Center Thank you, Mary Ellen Reply
I paid a portion of tuition from my traditional IRA, are there any tax breaks or exemptions on the early withdrawal tax law? Reply
Hi Latoya, There are no exceptions to the penalty rules for early withdrawal from an IRA for education purposes, but you may still qualify for the education credits for deductions. Here is more information: http://www.irs.gov/uac/Tax-Benefits-for-Education:-Information-Center Thank you, Mary Ellen Reply
I have a few Q’s. 1.) I’m an independent contractor (who’s working under a W9) and the gentleman I’m working for is going to send me a 1099 form at the end of the year. Does Turbo Tax have a section for this form? 2.) If so, will I need any other documentation when filling this section out on Turbo Tax? (I ask because I will be out if the country when I do my taxes this year). 3.) Lastly, will there be any issues with me filling out/submitting my taxes on Turbo Tax if I’m outside of the U.S? Thanks for your time Reply
Hi David, TurboTax has a section for entering income from a 1099-MISC. It is called self-employed or business income. If you have any expenses or supplies you use specifically for this income, you will be able to deduct those expenses. You should be able to access TurboTax.com from any where in the world if you have an internet connection. You can find additional information abou filing taxes when you are outside the US at http://www.irs.gov/Individuals/International-Taxpayers/U.S.-Citizens-and-Resident-Aliens-Abroad—Automatic-2-Month-Extension-of-Time-to-File Thank you, Mary Ellen Reply
Hi Rebecca, No, you don’t have to spend over $4000 to get the credit. Your credit will be based on the actual amount of qualified expenses you have. Here is more information: http://www.irs.gov/uac/Tax-Benefits-for-Education:-Information-Center Thank you, Mary Ellen Reply
I tried this site, and the part where i put in my info. It stated I do not qualify. I need to know if MY dependent does? I have paid over $1000 for his expenses this semester alone. He has put over 4,800 miles on his car for travel JUST for his college back and forth to home for fall semester. Isn’t there a travel credit somewhere?
Hi, my son stared working part time this March (2013) he pays for his education (tuition ,books, fees) But he’s still live at home with both parents, so we pay rent and bill’s Does he has to do he’s own taxes? And can we claim him as a dependent? transportation (gas) can be added as school expense? Thanks Reply
Hi Ralip. Whether you can claim your son as a dependent will be dependent on his age and whether or not he provides more than half of his own support. The IRS has a helpful calculator to determine who should claim him. http://www.irs.gov/uac/Who-Can-I-Claim-as-a-Dependent%3F Whoever claims him will claim his education expense deduction or credit. Transportation is not considered a qualified education expense for the education credits or deduction. Here is more information: http://www.irs.gov/uac/Tax-Benefits-for-Education:-Information-Center Thank you, Mary Ellen Reply
Can both myself and my son qualify for tax credit if he paid for the Fall semester 2013 and I paid for the Spring semester 2013? Reply
Hi Cathy, Only one of you can claim the tax credit, but not both depending on whether your son claims an exemption for himself or if you claim him as a dependent. If you claim him as a dependent, then you would get the credit. If your son claims himself then he would get the tax credit. Thank you, Lisa Greene-Lewis Reply
If I paid tuition$4,000 to a private online school, that I will receive a certificate, does this count? And which credit wold I receive? Or does it have to be a college? Reply
Hi Dina, There are requirements the school must meet in order for you to receive the credit or deduction. You can check with the main office of your school to see if they qualify. For more answers on education tax benefits go to: http://www.irs.gov/uac/Tax-Benefits-for-Education:-Information-Center Thank you, Mary Ellen Reply
If u are part time but still undergrad and have been going over 4 years, can u still get the TAX CREDIT? Reply
Hi Jessica, After 4 years, you can qualify for the Lifetime Learning Credit or the Tuition and Fees deduction, even if you are a part time student. Here is more information http://www.irs.gov/uac/Tax-Benefits-for-Education:-Information-Center Thank you, Mary Ellen Reply