The federal government offers tuition tax credit programs to help you pay for college. These programs can reduce your family’s federal income tax bill if certain conditions are met.
What’s a Tax Credit?
When you pay college costs, you’re allowed to subtract a certain amount from your tax bill later on. If your parents pay college expenses for you, they get the tax credit.
There are two different tuition tax credit programs. The amount of the credit varies and is subject to a number of rules, depending on which credit you use, what you use the money for, and what area of the country you live in. Your family may not claim more than one credit for the same student in any one year.
American opportunity tax credit: This is a partially refundable tax credit, which means you may be able to receive some of this credit in a tax refund after you file taxes. The credit can be applied to qualified education expenses. These include course-related books and supplies, in addition to tuition and fees. The student must be in the first four years of postsecondary education and enrolled at least half-time in a program leading to an undergraduate degree or other legitimate education credential.
Lifetime learning credit: This tax credit is available for undergraduate or graduate programs and for courses (even a single course) to acquire or improve job skills. The money claimed must have been used for tuition and fees. There’s no limit on the number of years the credit can be claimed.
Who Can Claim the Tax Credit?
A tax filer can claim a tuition tax credit for money spent on your college expenses only if you’re listed as a dependent on that person’s tax form. If you aren’t listed as a dependent on another person's tax form─and you’ve paid money for college expenses─you can claim the credit on your taxes.
What Information Do I Need to Claim an Education Tax Credit?
You’ll need a document from your college called a 1098-T, which will list the amount you paid in tuition and fees along with the grants and scholarships you received. This form is used to determine your eligibility to receive an education tax credit when filing your taxes. If you haven’t received the form, contact the financial aid office. Note that the 1098-T is usually available in your student portal.
More Information on Tuition Tax Credits
Additional rules and restrictions apply. Consult IRS Publication 970, Tax Benefits for Education for specific rules.
This article should be used for informational purposes only. It shouldn’t be regarded as tax or financial advice.