Learn how to save money on college or job training with the American Opportunity Credit and Lifetime Learning Credit.
Why Education Tax Credits Matter
Paying for college or career training can be expensive—but there’s good news. The IRS offers two powerful tax credits to help students and families lower the cost of education.
These credits can:
- Cut your tax bill
- Put money back in your pocket
- Reward you for investing in your future
Let’s walk through the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC) so you can see which one is right for you.
Who Can Claim an Education Credit?
To qualify for either credit, these rules apply:
- The student must be you, your spouse, or a dependent
- The student took college or job-training courses in 2024
- You received Form 1098-T, Tuition Statement, from an eligible school
Some exceptions may apply. For details, check with a tax advisor or the IRS website.
The American Opportunity Tax Credit (AOTC)
The AOTC offers the biggest benefit—but it’s only available for a limited time during a student’s college journey.
Here’s what to know:
- Worth up to $2,500 per eligible student
- Covers the first four years of college or vocational school
- Must be pursuing a degree or certificate
- It’s partially refundable—you could get up to $1,000 back, even if you don’t owe taxes
This credit helps students just starting out. It’s a great choice for undergraduates or their parents.
The Lifetime Learning Credit (LLC)
Not a college freshman? No problem. The LLC is more flexible and covers more situations.
- Worth up to $2,000 per tax return—not per student
- Covers all years of college and even non-degree courses
- Can be used for an unlimited number of years
- Perfect for grad students or those improving job skills
Unlike the AOTC, the LLC is non-refundable, which means it can lower your tax bill but won’t result in a refund if you don’t owe anything.
How to Claim an Education Credit
Claiming these credits is simple if you follow the right steps.
- Get your Form 1098-T from your school
- Complete Form 8863, Education Credits
- File the form with your federal tax return
If you use tax software, it should guide you through this process automatically.
Ask Yourself These Questions
- Did you or your child attend college or training in 2024?
- Do you have a 1098-T from your school?
- Which credit applies best to your situation—AOTC or LLC?
Answering these can help you decide which credit to claim and how to file.
Summary: Compare the Two Education Credits
| Credit | Max Amount | Who It’s For | Refundable? | Years Eligible |
|---|---|---|---|---|
| American Opportunity Credit | $2,500 per student | Undergrad students (first 4 years) | Partially | 4 years max |
| Lifetime Learning Credit | $2,000 per return | All college levels & job skills | No | Unlimited |
Need Help With Back Taxes?
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