There are a number of helpful tax deductions available to students enrolled in coursework today. However, if someone else, such as your parents, claim you as a dependent and take an exemption for you on their tax return, you can’t take the tuition and fees deduction if you file a return. The same goes for the American Opportunity and [lifetime learning tax credits](https://www.irs.gov/credits-deductions/individuals/llc). If another person or your parents claim you as a dependent, you can’t take either credit on your own tax return.
If you are someone's dependent, you will not be able to claim your college tuition. Provide your 1098-T to the person that is claiming you in order for them to utilize the tuition tax credit.
Tuition and Fees Deduction
The tuition and fees deduction is an adjustment to income that allows taxpayers who don’t itemize deductions to take a deduction for education expenses. For example, if you are your parents’ dependent and they pay your qualified education expenses, they can reduce their taxable income by up to $4,000 if they take the deduction. The deduction is subject to gross-income limits, and your parents must claim you as an exemption on their tax return. The unfortunate news is that if you are your parents' dependent, but they don’t claim you as an exemption, they can’t take the deduction and neither can you.
American Opportunity Credit
As with the tuition and fees deduction, you can’t claim the American Opportunity credit if you are listed as a dependent on another person’s tax return. But your parents can claim a maximum credit of up to $2,500 if you are their dependent and they claim an exemption for you. To claim the credit, you must be an eligible student, and they must pay your qualified education expenses. You are considered to be an eligible student if you are enrolled at least half time in a degree or certificate program for a minimum of one academic period during the tax year. In addition, you must not have completed the first four years of post-secondary education before the start of the tax year.
Lifetime Learning Credit
If your parents claim an exemption for you, they can claim a lifetime learning credit for your education expenses. They can take the credit even if you paid the expenses in part or in full. But if your parents don’t claim you as an exemption, you can claim the lifetime learning credit on your tax return even if you are your parents’ dependent. Either you or your parents can claim a credit of up to $2,000 for the tax year. When calculating the amount of the credit you can take, include any qualified education expenses you paid yourself or that your parents paid for you. Qualified education expenses include tuition, books, supplies and equipment you need for the courses in which you are enrolled.
What Else You Should Know
While a deduction such as the tuition and fees deduction reduces the amount of taxable income you have, a credit reduces the amount of tax you owe Uncle Sam. To claim either of the education credits, you must complete and submit Form 8863 with your Form 1040 or 1040A. In 2019, the IRS will replace Form 1040, Form 1040A and FormEZ with a much simpler layout. Keep in mind that you can’t claim one of the education credits and take the tuition and fees deduction in the same year. You must choose only one deduction. The tuition and fees deduction helps pay for your education expenses if you don’t qualify for the American Opportunity or lifetime learning credits. It can help to calculate the tax savings each option offers before choosing one.
- Internal Revenue Service: Tuition and Fees Deduction
- Internal Revenue Service: American Opportunity Tax Credit
- IRS Working on New Form 1040
- Internal Revenue Service. "Extended and Expired Legislation." Accessed Oct. 26, 2020.
- USA.gov. "Tax Law Changes." Accessed Oct. 26, 2020.
- Internal Revenue Service. "Questions and Answers About the 2018 Form 1040." Accessed Oct. 26, 2020.
- Internal Revenue Service. "Be Tax Ready – Understanding Tax Reform Changes Affecting Individuals and Families." Accessed Oct. 26, 2020.
- Internal Revenue Service. "Form 8917 Tuition and Fees Deduction," Page 2. Accessed Oct. 26, 2020.
- Internal Revenue Service. "Compare Education Credits and Tuition and Fees Deduction." Accessed Oct. 26, 2020.
- Internal Revenue Service. "File Form 1040-X to Amend a Tax Return." Accessed Oct. 26, 2020.
Amber Keefer has more than 25 years of experience working in the fields of human services and health care administration. Writing professionally since 1997, she has written articles covering business and finance, health, fitness, parenting and senior living issues for both print and online publications. Keefer holds a B.A. from Bloomsburg University of Pennsylvania and an M.B.A. in health care management from Baker College.