The two education credits, the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC), survived the 2018 Tax Cuts and Jobs Act. See below for helpful tips and a ch
art to breakdown the specifics of each credit.
- It is important to keep thorough records of all education related expenses. While you will receive a Form 1098-T for the institution reporting payments received, it is always a good idea to double check all reported values. The form is created by the institution and could have errors. Tuition payment receipts and scholarships are easily through the student’s account portal.
- Qualified expenses for this credit does not just include tuition. Books, supplies, and required equipment are also considered qualified education expenses. This could include but are not limited to: computers, calculators, iclickers, paper/ink, lab coats/equipment, backpack, lab fees, software, and flash drives. If the student is a dependent, remind them to keep receipts or pay with a credit card so there is documentation.
- Housing, parking passes, travel, research, and meal plans are not qualified educational expenses.
- If the student/parent prepays for expenses in one year but does not start the course until the following year, the credit is still applicable. For example, you paid for Spring 2019 tuition in 2018. The Spring 2019 tuition costs would be deductible on the 2018 tax return. As long as the tuition you paid for begins in the first 3 months of the next year, they can be used in the year paid. Form 1098-T will denote this in Box 7.