If you are a college student, you (or your parents if you are a dependent student) may qualify for federal tax credits and deductions that allow you to recoup some of the money you spend on college expenses and student loan interest.

There are two tax credits and one deduction related to higher education expenses: You can take either the American opportunity tax credit (AOTC) or the lifetime learning credit (LLC), which deduct education expenses from the amount of tax you pay. The student loan interest deduction (which can be taken along with either of the credits) reduces your taxable income. Students who have taxable income can claim these tax credits if they are not claimed as a dependent on another person’s tax return. Parents can claim the credit for students they claim as dependents.

Each of these tax breaks has its own rules for eligibility, which can change from year to year. Your best bet is to review these rules annually. The following information is based on the 2022 tax year.

THE AMERICAN OPPORTUNITY CREDIT

Amount of credit: 100 percent of the first $2,000 spent on qualified education expenses and 25 percent of the next $2,000. The maximum credit per student per year is $2,500.

College years covered: The first four undergraduate years of college.

Who is eligible: Parents of undergraduate college students and independent college students enrolled in a recognized degree or credential program.

Income limits: Single filers with Modified Adjusted Gross Income (MAGI) less than $80,000 and joint filers making less than $180,000 may take up to a $2,500 credit. A reduced credit is available to single filers with MAGI of $80,000–$90,000 and joint filers with MAGI of $160,000–$180,000.

Qualified expenses: Tuition, required fees, and required course materials, including textbooks and computers. Room and board, insurance, student health fees, transportation, and living expenses are not included.

Attendance: Student must attend an eligible institution at least half-time during the tax year.

Other: If the credit is greater than the amount of tax you owe, you can have 40 percent of any remaining amount of the credit (up to $1,000) refunded to you. If the Internal Revenue Service (IRS) audits your return and finds that you claimed the credit when you were not eligible for it, or if you do not have the documents to show you qualified for it, you must repay the credit you received with interest. The IRS may also charge you an accuracy or fraud penalty or ban you from claiming the credit for up to 10 years.

THE LIFETIME LEARNING CREDIT

Amount of credit: Up to $2,000 per tax return (20 percent of the first $10,000 of qualified education expenses paid for eligible students).

College years covered: All college years, including years needed to complete a postgraduate or professional degree or to complete courses to acquire or improve job skills. There is no limit to how many years you can claim the credit.

Who is eligible: Undergraduate and graduate students, non-degree seeking students, and vocational students, and parents who pay qualified expenses for these students. The courses do not need to be part of a degree or certificate program.

Income limits: Single filers with MAGI less than $80,000 and joint filers with MAGI less than $160,000 may take the full $2,000 credit. A reduced credit is available for single filers with MAGI of $80,000–$90,000 and joint filers with MAGI of $160,000–$180,000.

Qualified expenses: Tuition, fees, and required course materials for one or more courses to acquire or improve job skills. Room and board, insurance, student health fees, transportation, and living expenses are not included.

Attendance: Enrollment by a family member in a college or vocational course during the tax year. Your family includes the taxpayer, the taxpayer's spouse, and the taxpayer's dependents.

THE STUDENT LOAN INTEREST DEDUCTION

Amount of the deduction: A maximum of $2,500.

College years covered: All college years, including postgraduate education.

Who is eligible: Students and parents with federal or private education loans in their name that they used to pay for education expenses for themselves, a dependent student, or a spouse.

Income limits: Single filers with MAGI less than $85,000 and joint filers with MAGI less than $145,000 may take deduct the full $2,500. A reduced deduction is available to single filers with MAGI of $70,000–$85,000 and joint filers with MAGI of $145,000–$175,000.

Qualified expenses: The loan must have been used solely to pay for tuition and required fees, required books and equipment, transportation, and room and board. This includes interest on credit card debt if you used the line of credit only to pay for qualified education expenses. Expenses paid by a loan received from a person related to you or from a qualified employer plan are not eligible.

Attendance: Student must attend an eligible institution at least half-time during the tax year.

Other: You can take the deduction for every year you pay required or voluntary interest on the loan until the loan is paid. Only the person legally obligated to repay the education loan may take the interest deduction. You cannot deduct loan interest that is eligible to be deducted under a different tax rule. For example, if you use a home equity loan to pay for qualified education expenses, the interest is deductible as mortgage interest but not as education loan interest. If you did not pay any interest on the loan during the tax year, you cannot claim this deduction.

Make Sure You receive your 1098T and 1098E Forms

Your college should send you a 1098-T form in January, reporting the tuition expenses you paid the previous calendar year. The form will include only the qualified expenses you paid – it won’t include what you paid for room and board or other non-qualified expenses. You or your parents will need to file this form to claim either the American opportunity or lifetime learning credits.

To take the Student Loan Interest deduction, you’ll need to file the 1098-E form, which you should receive from your loan servicer if you paid more than $600 in interest during the previous calendar year. If you paid less than $600 in interest, you may still take the deduction, but you may have to ask your servicer for the form.

Using these tax breaks, if you are eligible, can offset some of the costs of higher education. To learn more about tax breaks for education, visit the Internal Revenue Service website.