Reductions for Tax-Free Aid
When figuring your qualified educational expenses for the American opportunity credit, you must reduce the expenses by tax-free assistance you receive, which includes Pell grants and scholarships.
Essentially, you’re not allowed to claim a tax credit for money you didn’t pay out-of-pocket.
Can you claim Aotc If you have financial aid?
Not everyone is eligible for the AOTC. The good news is the IRS offers other tax credits and deductions for college students: Lifetime Learning Credit – The Lifetime Learning Credit is for qualified tuition and related expenses for eligible students enrolled in eligible educational institutions.
Do I get a 1098 t if I get financial aid?
Yes and no. There is no IRS requirement that you must claim an education credit or tuition and fees deduction. You must also claim the form if your scholarships/grants/tuition free assistance is larger than your education expenses. The excess is your taxable income and must be reported as such with the form 1098-T.
Who is eligible for American opportunity credit?
Who can claim the American opportunity tax credit? A. Generally, a taxpayer whose modified adjusted gross income is $80,000 or less ($160,000 or less for joint filers) can claim the credit for the qualified expenses of an eligible student.
Who can claim education tax credit?
You, your dependent or a third party pays qualified education expenses for higher education. An eligible student must be enrolled at an eligible educational institution. The eligible student is yourself, your spouse or a dependent you list on your tax return.