Taxes: Am I eligible to claim an education credit?

Find out if you are eligible to claim an education credit on your taxes.

Understand the requirements to claim this credit.

Are you eligible for the lifetime learning credit? We’ll tell you!

Are you eligible to claim an education credit on your taxes? If no one can claim you as a dependent and you have spent money on educational expenses, you may be eligible to claim one or two educational credits when you file your taxes.

For tax years 2018, 2019 and 2020, the maximum deduction for educational costs was $4,000. However, currently this limit has been adjusted by the Internal Revenue Service, so the maximum deduction will be approximately $2,500. Find out if you can claim an education credit!

What is an education credit?

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You may be eligible for an education credit, but first you need to know what the Internal Revenue Service means by this. On its official site, the IRS defines this tax benefit as a credit that helps cover the cost of higher education by deducting what you have spent from your taxable income.

One of the advantages of education credits is that they could reduce the amount of taxes you owe and even make it possible to get a refund. There are two main types: the American Opportunity Tax Credit (AOTL) and Lifetime Learning Credit (LLC).

AOTC: Find out if you are eligible for an education credit

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The American Opportunity Tax Credit (AOTC) is an education credit for up to $2,500 and a refund of up to 40% (or up to $1,000). You may be eligible to claim the AOTC if: you have paid part or all of all educational expenses for four years at a qualified institution, submitted a beneficiary identification number, have modified gross income under a limited amount.

The AOTC credit cannot be used at the same time as another similar benefit. In addition, you must be enrolled in a degree, certification or post-secondary education program and you must not have a criminal record for possession or distribution of substances.

Are you eligible for an LLC education credit?

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The Lifetime Learning Credit (LLC) is a non-refundable tax credit with a limited amount per family. It can be claimed for tuition and other expenses related to higher education at a qualified university, either for an undergraduate or graduate program or for a course that aims to improve skills for a specific job.

You can claim an LLC education credit if you paid for an educational program for yourself, your spouse or any of your dependents, but you must claim the credit on a joint return if you are married.

Other credits

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There are some tax credits for post-secondary education but the student must meet certain requirements. For example, the student must be enrolled in a post-secondary education at least part time.

Another requirement is that the studies must be part of a degree program, certificate or any other educational degree with a duration of at least one academic year at an eligible institution. The credit covers tuition or related expenses of an education designed for the student to acquire skills to integrate into the labor force.