Education Tax Credits to Claim for 2024

An education tax credit is a type of tax benefit provided by the U.S. government to help offset the costs of higher education expenses. Education tax credits can help reduce the amount of tax owed or provide a refund if the credit exceeds what you owe in some cases, giving you extra money to pocket into your personal funds. This is great news if you’re a student on a limited budget. 

And if you’re wondering, “Who qualifies for the education tax credits,” the answer varies by type of education credit available. We’ll dig into the details in the next section!

A few key education credits can help your tax bottom line. They vary by make and design but aim to reduce your taxable liability as a college student.

The American Opportunity Tax Credit (AOTC) allows a maximum credit of $2,500 for qualifying educational expenses paid during the tax year (100% of the first $2,000 of qualified expenses and 25% of the next $2,000 of qualified expenses) for an eligible student attending an eligible educational institution.

In addition, up to 40% ($1,000) of the AOC is refundable, allowing taxpayers who do not have a tax liability to claim the credit.

Example: Eli and Monica pay $8,000 in eligible education expenses for their daughter’s junior year in college. Their tax liability is $1,000. Under the American Opportunity Credit, they qualify for a credit of $2,500, $1,000 of which is refundable.

The Lifetime Learning Credit, or LLC, allows a maximum credit of up to $2,000 for qualifying educational expenses paid during the tax year for an eligible student enrolled at an eligible educational institution. The LLC is calculated as 20% of up to $10,000 of qualified education expenses per return. The credit is non-refundable.

Example: Glenn paid qualified tuition of $20,000. He is eligible for a maximum lifetime learning credit of $2,000 ($10,000 × 20%).

To claim either credit, qualifying educational expenses must be paid for an “eligible student.” An eligible student can be yourself, your spouse, or your dependent for whom you claim an exemption. The meaning of an eligible student is different for each credit. Below are the general requirements to be considered an eligible student:

• The student must not have had expenses used to figure the AOC in four earlier tax years.
• For at least one academic period during the tax year the student must meet both of the following requirements:

1.      The student must be a candidate for a degree, certificate, or other recognized educational credential.

2.      The student must take at least one-half of a full workload, which is determined by the school.

• The student must not have completed the first four years of secondary education.
• The student must not have a federal or state felony conviction for possessing or distributing drugs.

• The student must be enrolled or taking courses at an eligible education institution.
• The student must be taking a higher education course or courses to get a degree or other recognized education credential or to get or improve job skills.

There are a few things to keep in mind as you claim tax credits for education. Unlike the AOC, the LLC can be claimed an unlimited number of times. Plus, graduate students can qualify for the tax break, too! Also, remember that the AOC and LLC can’t be claimed in the same year for the same student.

When you take educational tax credits, you’ll need to use a few additional forms than you normally would on your tax return. Add these to your list of tax forms that need to be completed as a student:

For the AOTC and LLC