To claim education credits, you generally file Form 8863 with your return and use Form 1098‑T from your institution to verify qualified expenses. Either you or your parent may claim the credit, but not both, so coordinate who benefits based on your dependency status.

Two major credits can offset the cost of higher education: the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). Credits reduce your tax liability, whereas deductions lower the amount of income subject to tax. You cannot claim a credit for expenses paid with tax‑free funds—such as scholarships, grants or other tax‑free education benefits—you must subtract those amounts from your qualified expenses.

The LLC is worth up to $2,000 per return—it equals 20% of the first $10,000 of qualified education expenses. Unlike the AOTC, it’s available for all years of college or career training and there’s no limit on the number of times you can claim it. The LLC is not refundable, so it can reduce your tax bill to zero but won’t generate a refund.

If you paid interest on qualified student loans, you may be able to reduce your taxable income by up to $2,500. The loan must have been used solely for education and cannot be from a relative or qualified employer plan. The student must be yourself, your spouse, or your dependent, and must have been enrolled at least half‑time in a degree or certificate program. You generally can’t claim this deduction if you file separately or if you or your spouse is claimed as a dependent. Note: Up to $10,000 from a 529 plan can be applied to student loans per beneficiary, but interest paid with 529 funds isn’t deductible.

Plan ahead and maintain receipts and transcripts to substantiate your education expenses. Review the eligibility rules and income limits for each credit or deduction. Never “double dip” by claiming credits on expenses already paid with scholarships, grants, or tax‑free savings plan distributions. Consult a professional to optimize benefits for your situation.

The AOTC can be worth up to $2,500 per eligible student—100% of the first $2,000 of qualified expenses plus 25% of the next $2,000. It’s available for the first four years of post‑secondary education if you’re pursuing a degree or credential, enrolled at least half‑time, and haven’t completed four years of college. The full credit is available if your modified adjusted gross income is $80,000 or less ($160,000 if married filing jointly), phases out at $90,000 ($180,000 for married filing jointly) and isn’t available beyond those amounts

The LLC (also called Lifetime Learning Credit) equals 20% of up to $10,000 of qualified expenses, for a maximum of $2,000 per return. It can be claimed for any post‑secondary education or courses to acquire or improve job skills, and there’s no limit on the number of years you can claim it. Unlike the AOTC, the LLC is non‑refundable and has lower income thresholds.