Question

I have a question about student tax credit — What college student tax credit am I able to claim for my education expenses?

Answer

For 2020, the student tax credit examples that follow are the only credits available to most students:

The American Opportunity Credit:

  • Allows a maximum student tax credit of $2,500 per student of these costs:
    • Tuition
    • Fees
    • Course materials
  • Covers both of these:
    • 100% of the first $2,000 of qualified expenses
    • 25% of the next $2,000 of expenses
  • Is usually available to degree-seeking students during the first four years of their post-secondary education

Textbooks required for a course are a qualifying college student tax credit expense for the American Opportunity Credit. This is true regardless of where you buy them.

The Lifetime Learning Credit:

  • Allows a credit of 20% of the student’s first $10,000 of qualifying expenses. The maximum credit is $2,000 per return.
  • Is available to students taking at least one post-secondary course that’s either:
    • Part of a degree program
    • Taken to acquire or improve job skills

Textbooks aren’t qualifying student tax credit expenses for the Lifetime Learning Credit. There’s an exception if you have to buy books directly from the institution (not the bookstore) as a condition of attendance.

You can deduct the costs of work-related education as a business expense if either of these applies to your education:

  • It’s required by your employer or by law to keep your present salary, status, or job.
  • It maintains or improves skills needed in your present work.

If you deduct the expenses as business expenses, you can’t claim them for college student tax credit, too.

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