There are 2 education credits, but you are only allowed to claim one, (if you qualify for it). The American Opportunity Tax Credit (AOTC) can be more valuable. HOWEVER, you can only claim it 4 times, so if you are starting a four-year degree, you might not want to use it this year if you will have larger amounts of education expenses in 2018, 2019, 2020 and 2021. You could take the Lifetime Learning Credit this year (there is no limit to this credit if you qualify) and save the AOTC for the other years. Read about the credits and decide how best to proceed. EITHER WAY, YOU CAN ONLY CLAIM WHAT YOU ACTUALLY PAID IN 2017, NOT WHAT THE SCHOOL BILLED.
Do you qualify for either credit? You need to be an eligible student. For the AOTC, that means you need to have been attending school at least half time. If your 1098-T indicates you are not half-time, you will need to keep copies of your school records with your tax return file to prove you were enrolled. For the Lifetime Learning credit, a student needs to be enrolled in one or more courses at an eligible
educational institution
According to the IRS:
"For
2017, treat an academic period beginning in the first 3 months of 2018 as if it
began in 2017 if qualified education expenses for the student were paid in 2017
for that academic period." and "Was the student enrolled at least half-time in a program
leading to a degree, certificate, or other recognized educational credential
for at least one academic period beginning during 2016 (or the first 3 months
of 2018 if the qualified expenses were paid in 2017)"
Because the AOTC can result in a "refundable credit" a Taxpayer claiming this credit needs to keep proper records. Read IRS Pub 970 carefully, it gives good advice and great examples on how to maximize your education credits.
CLICK
HERE for IRS Pub 970 Education Credits
