What You Need to Know about AOTC and LLC

The American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC) help with the cost of higher education by reducing the taxpayer's income tax liability dollar-for-dollar on their tax return for qualified education expenses paid. 

Learn which education credit helps you the most by reviewing Tax Benefits for Education: Information Center and Compare Education Credits.

Our Interactive Tax Assistant helps you determine if you are eligible for education credits and deductions.

There are several differences and some similarities between the AOTC and the LLC. You can claim both benefits on the same return but not for the same student or the same qualified expenses. See Education Benefits -- No Double Benefits Allowed for more information on claiming one or more education benefits.

Find the answers to the most common questions asked by reviewing Education Credits: Questions and Answers.

Here's what colleges, universities, trade and technical schools, educational organizations, student organizations, and high schools need to know:

IRS has products to help you inform students and parents about the availability of tax benefits for education:

• Tweet one of our Twitter messages.
• Link to our Education Credits page.

Here's what preparers of the Forms 1098-T need to know:

It's important to provide an accurate and timely Form 1098-T PDF, Tuition Statement, to help students offset the cost of higher education and avoid costly errors with the IRS. See the Instructions for Form 1098-E and Form 1098-T PDF for more information.

Here's what tax return preparers need to know:

• Eligibility requirements -- Start with our Compare Education Credits comparison chart for a quick look or review the Education Credits page for more details.

 

• Review Form 1098-T PDF -- Did the student attend at least half time for a full academic period? Is the 'graduate student' box checked? For what academic period are the amounts reported? Remember the amount in Box 1 on Form 1098-T may differ from the amount your client can use to compute a credit on this year's tax return. Generally, students receive a Form 1098-T PDF, Tuition Statement, from their school by January 31. This statement will help you figure the credit.

 

• If the student didn't receive a Form 1098-T PDF, inform your client that the IRS may ask for documentation to support the credit. See Form 866-H-AOC PDF and Form 866-H-AOTC-MAX PDF for examples of helpful documentation. Form 866-H-AOC(SP) PDF is also available in Spanish.

 

• Complete and file Form 8863 PDF-- To claim the AOTC, your client must complete the Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits) and attach the completed form to their tax return. Part I is for the refundable AOTC, Part II is for the non-refundable AOTC or the LLC, and in Part III your client must enter information for each student.

 

• Remember: no double benefits are allowed -- your client can claim only one tax benefit for a student and for a particular tax year. Ask where the education funds came from, such as a tax-free scholarship or grant, the Department of Veteran's Affairs, the tax-free portion of a Coverdell education savings account or a qualified tuition program. If your client’s claim for the AOTC was disallowed in a prior tax year, Form 8862 PDF will need to be filed before claiming the credit in future tax years.

         See What to Do if We Deny Your Claim for a Credit. 

 

• Know the questions to ask to help your clients get the most out of tax benefits for education.

 

• Avoid common AOTC errors.

More Resources 

• Find the latest information for refundable credits on Refundable Credits News and Updates.
• See the AOTC and LLC criteria side by side on our Compare Education Credits comparison chart.
• Use the Interactive Tax Assistant to determine whether you can claim the American Opportunity Credit or the Lifetime Learning Credit.
• See Tax Tip 2022-38: Two tax credits that can help cover the cost of higher education.

Related Forms and Publications

• Publication 970 PDFPDF, Tax Benefits for Education
• Form 8863 PDFPDF, Education Credits and Instructions for Form 8863 PDFPDF
• Form 1098-T PDFPDF, Tuition Statement and Instructions for Forms 1098-E and T PDFPDF
• Publication 4772, American Opportunity Tax Credit Flyer PDF
• Publication 4982, Tuition Statement Flyer PDF
• Publication 5081, Education Credits On-line Resource PDF
• Publication 5198, Are you or a family member attending college or taking courses to acquire or improve job skills? PDF