No double benefits allowed when it comes to education benefits.An education credit helps with the cost of higher education by reducing the amount of tax owed on your tax return. If the credit reduces your tax to less than zero, you may get a refund. There are two education credits available: the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC).
A deduction reduces the amount of income that is subject to tax, thus generally reducing the amount of tax you may have to pay. The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000.
You can’t take more than one education benefit for the same student using the same expenses. So, you can’t take the AOTC, the LLC or the tuition and fees deduction for the same expenses for the same student in the same tax year. Also, if you receive tax-free educational assistance, such as a grant, you need to subtract that amount from your qualified education expenses.
Determining which one of these education benefits will provide you with the most savings can be tricky, but I can help determine what’s best for your tax situation. Here are some criteria I look at: