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- Financial Literacy for High School Students
Home » Financial Literacy » Resources for Teachers » Financial Literacy for High School Students
Are You Teaching Financial Literacy To High School Students?
The teaching curriculum consists of fourteen lesson plans & worksheets designed to augment a semester course in life skills and personal finance management. The Teacher’s Guide, compiled in a separate, easy-to-use notebook, includes an outline of the curriculum:
- Lesson objectives
- Suggested resources
- Teaching notes
- Chart indicating appropriate age groups for the key learnings offered in each lesson
- Presentation slides
- Answer keys to worksheets (when necessary)
Introductory Overview to Financial Literacy for High School Students
Lesson one: making personal finance decisions.
Each day, we are faced with many decisions. While most decisions are simple, such as “what should I wear?” or “what should I eat?,” others are more complex, such as “should I buy a new or used car?” As decision-making skills are used and improved, a person’s quality of life is enhanced. Wiser choices result in better use of time, money, and other resources. This introductory lesson provides students with an opportunity to learn more about decision-making. The lesson starts with an overview of the decision-making process followed by a discussion of various internal and external factors that affect decisions.
Teacher’s Guide – Lesson One: Making Decisions
Student Guide – Lesson One: Making Decisions
Teacher’s Slide Presentation – Lesson One: Making Decisions
Teacher’s Power Point Presentation – Lesson One: Making Decisions
Lesson Two: Making Money
Building your career is one of the surest ways to increase income and make money. When planning for the future, one of the most critical financial decisions is determining your career path. In this lesson, students will be encouraged to consider various topics related to career planning and the financial aspects of employment. This variation of the decision-making process can help a person match personal abilities and interests with appropriate employment opportunities.
Teacher’s Guide – Lesson Two: Making Money
Student Guide – Lesson Two: Making Money
Teacher’s Slide Presentation – Lesson Two: Making Money
Teacher’s Power Point Presentation – Lesson Two: Making Money
Lesson Three: The Art of Budgeting
A personal budget is a financial plan that allocates future income toward expenses, savings, and debt repayment. “Where does the money go?” is a common dilemma faced by many individuals and households when it comes to budgeting and money management. Effective money management starts with a goal and a step-by-step plan for saving and spending. Financial goals should be realistic, be specific, have a timeframe, and imply an action to be taken. This lesson will encourage students to take the time and effort to develop their own personal financial goals and budget.
Teacher’s Guide – Lesson Three: The Art Of Budgeting
Student Guide – Lesson Three: The Art Of Budgeting
Teacher’s Slide Presentation – Lesson Three: The Art Of Budgeting
Teachers Power Point Presentation – Lesson Three: The Art Of Budgeting
Lesson Four: Living on Your Own
As young people grow up, a common goal is to live on their own. However, the challenges of independent living are often quite different from their expectations. This lesson provides a reality check for students as they investigate the costs associated with moving, obtaining furniture and appliances, and renting an apartment.
Teacher’s Guide – Lesson Four: Living On Your Own
Student Guide – Lesson Four: Living On Your Own
Teacher’s Slide Presentation – Lesson Four: Living On Your Own
Teacher’s Power Point Presentation – Lesson Four: Living On Your Own
Lesson Five: Buying a Home
For many, buying a home is the single most important financial decision they will make in their lifetime. However, the process of becoming a first-time homebuyer can be overwhelming, and requires a foundation for basic home-buying knowledge. This lesson will provide students with information on buying a home and where and how to begin the process. After comparing the differences between renting and buying, students will be introduced to a five-step process for home buying. This framework provides an overview for the activities involved with selecting and purchasing a home.
Teacher’s Guide – Lesson Five: Buying A Home
Student Guide – Lesson Five: Buying A Home
Teacher’s Slide Presentation – Lesson Five: Buying A Home
Teacher’s Power Point Presentation – Lesson Five: Buying A Home
Lesson Six: Banking Services
If the fee for an ATM transaction to withdraw money is $1 and a person withdraws money twice a week, the banking fees for that person will be $104 a year. Over a five-year period, those fees invested at five percent would grow to more than $570. Most students know that banks and other financial institutions (credit unions, savings and loan associations) offer a variety of services. However, few people know how to make wise choices when using financial services. In this lesson, students will learn about the different types of financial service products available and the features of each.
Teacher’s Guide – Lesson Six: Banking Services
Student Guide – Lesson Six: Banking Services
Teacher’s Slide Presentation – Lesson Six: Banking Services
Teacher’s Power Point Presentation – Lesson Six: Banking Services
Lesson Seven: Credit
In today’s world, credit is integrated into everyday life. From renting a car to reserving an airline ticket or hotel room, credit cards have become a necessary convenience. However, using credit wisely is critical to building a solid credit history and maintaining fiscal fitness. While most students have a general idea about the advantages and disadvantages of credit, this lesson provides an opportunity to discuss these issues in more detail.
Teachers Guide – Lesson Seven: Credit
Student Guide – Lesson Seven: Credit
Teacher’s Slide Presentation – Lesson Seven: Credit
Teacher’s Power Point Presentation – Lesson Seven: Credit
Lesson Eight: Credit Cards
What is APR? What is a grace period? What are transaction fees? These and other questions will be answered in this lesson as students learn about credit cards, and the different types of cards available and features of each, such as bank cards, store cards, and travel and entertainment cards.
As students start to shop for their first (or next) credit card, this lesson will make them aware of various costs and features. Included in this section is a discussion of the methods for calculating finance charges. Various federal laws protect our rights as we apply for and use credit cards, such as procedures for disputes and protection from card theft and fraud. In this lesson, students will also be given an opportunity to analyze the information contained on a credit card statement.
Teacher’s Guide – Lesson Eight: Credit Cards
Student Guide – Lesson Eight: Credit Cards
Teacher’s Slide Presentation – Lesson Eight: Credit Cards
Teacher’s Power Point Presentation – Lesson Eight: Credit Cards
Lesson Nine: Cars and Loans
“Should I buy a new car or a used car?” “Where is the best place to finance my automobile purchase?” “Is it better to take the rebate or the low-rate financing plan?” These are typical questions asked by people buying vehicles. In this lesson, students are asked to identify costs associated with owning and operating a motor vehicle. Since these costs are commonly underestimated, guidelines are provided on how much to spend when buying vehicles.
Teacher’s Guide – Lesson Nine: Cars And Loans
Student Guide – Lesson Nine: Cars And Loans
Teacher’s Slide Presentation – Lesson Nine: Cars And Loans
Teacher’s Power Point Presentation – Lesson Nine: Cars And Loans
Lesson Ten: The Influence of Advertising
In today’s modern world, advertising seems to be everywhere we look; online, television, billboards, magazines, newspapers, on buses, grocery carts, even cell phones. In addition, some forms of advertising can be subliminal, such as the strategically-placed soda can in a movie. We can’t help but be influenced and manipulated as consumers. In this lesson, students will become aware of the various techniques and appeals used to influence consumer behavior.
Teachers Guide – Lesson Ten: The Influence Of Advertising
Lesson 10: The Influence of Advertising – High School Student Guide
Teacher’s Slide Presentation – Lesson Ten: The Influence Of Advertising
Teacher’s Power Point Presentation – Lesson Ten: The Influence Of Advertising
Lesson Eleven: Consumer Awareness
Decisions, decisions. With so many choices available to us, how can we be sure we’re making the right decision? Wise consumer buying starts with a plan. Using a systematic purchasing strategy will provide students with an ability to make more effective purchases. Comparative shopping techniques will be discussed to encourage students to carefully consider price, product attributes, warranties, and store policies. Next, this lesson covers a variety of buying methods, such as buying clubs, shopping by phone, catalogs, online, and door-to-door selling.
Teacher’s Guide – Lesson Eleven: Consumer Awareness
Student Guide – Lesson Eleven: Consumer Awareness
Teacher’s Slide Presentation – Lesson Eleven: Consumer Awareness
Teacher’s Power Point Presentation – Lesson Eleven: Consumer Awareness
Lesson Twelve: Saving and Investing
Saving just 35 cents a day will result in more than $125 in a year. Small amounts saved and invested can easily grow into larger sums. However, a person must start to save. This lesson provides students with a basic knowledge of saving and investing. The process starts with setting financial goals. Next, a commitment to saving is discussed.
Teacher’s Guide – Lesson Twelve: Saving And Investing
Student Guide – Lesson Twelve: Saving And Investing
Teacher’s Slide Presentation – Lesson Twelve: Saving And Investing
Teacher’s Power Point Presentation – Lesson Twelve: Saving And Investing
Lesson Thirteen: In Trouble
The material in this lesson will help students become aware of the warning signs of financial difficulties. This lesson includes information on where to go for debt consolidation help and for nonprofit credit counseling .
Teacher’s Guide – Lesson Thirteen: In Trouble
Student Guide – Lesson Thirteen: In Trouble
Teacher’s Slide Presentation – Lesson Thirteen: In Trouble
Teacher’s Power Point Presentation – Lesson Thirteen: In Trouble
Lesson Fourteen: Consumer Privacy
In today’s information age, keeping your personal financial information private can be challenging. What you put on an application for a loan, your payment history, where you make purchases, and your account balances are but a few of the financial records that can be sold to third parties and other organizations. This lesson, with attached budgeting activities, will encourage high school students to take the time and effort to develop their own personal financial goals and spending behaviors.
Teacher’s Guide – Lesson Fourteen: Consumer Privacy
Student Guide – Lesson Fourteen: Consumer Privacy
Teacher’s Slide Presentation – Lesson Fourteen: Consumer Privacy
Teacher’s Power Point Presentation – Lesson Fourteen: Consumer Privacy
Supplementary Resources
In an effort to give you the most up-to-date information for teaching and making personal financial decisions, we’ve compiled the following lists of periodicals and organizations that can enhance your use of Practical Money Skills for Life.
More Resources for Students: The Cost of College
The cost to attend college has soared faster than almost any segment of the economy over the last 30 years. The average cost for students attending a public university is up 213% ($3,190 in 1988 to $9,970 in 2018), while private school is up 129% ($15,160 to $34,740) over the same time period.
That’s the primary reason Americans are $1.4 trillion in debt on student loans.
The good news is that are hundreds of online sites offering tips on not just what it will cost, but what you can do to pay for it. So, take a deep breath and check out these sites that should help you find a college you can afford to attend.
- www.collegedata.com : This is a wonderful resource for everything from cost factors to how to apply to how to pay your own way.
- www.trends.collegeboard.org : They specialize in providing historical data on college pricing, financial aid and what your degree will be worth when you graduate.
- https://studentaid.ed.gov/sa/prepare-for-college/choosing-schools/consider/costs : This is the site for the Department of Education, which provides approximately 67% of college financial aid. You will find detailed evaluation of costs and financial aid here.
- https://www.aie.org/ : This site offers answers on the cost of college, how to finance it and even how to manage money while you’re there.
- https://nces.ed.gov/ : This is a government site that collects and analyzes date from every college and provides accurate data on average cost of attendance.
- www.mykidscollegechoice.com : Very focused on finding a college you can afford and ways to pay for it.
- www.collegecountdown.com : Asks and answers questions about actual costs of college, school that fit you financially and how to evaluate offers you receive from colleges.
Other Resources for Teachers
- Debt Relief For Teachers
- Student Loan Forgiveness for Teachers
- Financial Literacy for Teachers
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15 Financial Literacy Activities for High School Students (PDFs)
Trying to teach teen students about money check out these free financial literacy activities for high school students (pdfs)..
Teaching teen students different parts of managing money? Awesome – let’s get you some free financial literacy activities for high schools (PDFs included).
You’ll find activities and PDFs below that cover a variety of money subjects:
- Money management
- Credit cards
- Spending plans
Below are PDFs, games with PDFs, PowerPoint slides, and teacher guides to help you teach your students all about managing money. Also, you might want to check out these financial literacy week themes .
Financial Literacy Activities for High School Students (PDFs included)
From learning how to rent an apartment, to learning how to decide on a big purchase decision – these lessons help prepare teens for real-life scenarios they’ll face in a few short years.
Psst: are you a homeschooler? Check out these 31 free homeschool personal finance curriculum . Includes curriculum alignments, where possible.
1. The True Cost of Renting a Place
Since your students will likely rent before owning a home, it’s vital that they learn how to actually rent an apartment (and what costs are involved).
Use this lesson plan, handouts, and slides to teach your students how to rent, the total costs involved, and how to compare rental options.
2. Put it in the Bank
Dallas Fed has a great series of resources around helping students learn how to build wealth.
This particular lesson has students compare putting money under a mattress and putting money into a savings bank account. Including a whole lesson on simple vs. compound interest.
Comes with slides, teacher’s notes, and student worksheets (hint: it’s hard to figure out how to get the materials – at least it was for me! First, click on the lesson you want, then click on the red “Procedure Documents” and “Interactive Lessons” to get the materials).
Hint: As a teacher, you can order up to 50 print copies of their 40-page booklet, Building Wealth: A Beginner’s Guide to Securing Your Financial Future, for free here ! Comes in Spanish, too. Woohoo!
3. Use Credit Wisely
This set of slides, handouts, and notes takes students through how to use credit wisely.
Students will:
- Go through borrowing scenarios with specific information from fictional characters and debate whether or not they should take a loan
- Look at the impact of debt
- Learn lots of important financial words having to do with credit and debt
(Hint: it’s hard to figure out how to get the materials – at least it was for me! First, click on the lesson you want, then click on the red “Procedure Documents” and “Interactive Lessons” to get the materials).
Psst: Teaching students about credit? Definitely check out these credit card games for students .
4. KWHS Comparison Shopping Big-Ticket Items
So, here’s an eye-opening experience for your students – use this video and worksheet from Wharton High School to teach them about retail marketing tactics (aka, getting teens and adults to spend more money).
5. What is it Worth Saving For?
I’ve got a whole article on cool things for teens to save up for , so I’m all about financial literacy activities helping teenagers to figure out their next savings goal.
This is a daydreaming and writing exercise where teens are taken through a series of questions to get to what they really are willing to prioritize their money to save towards.
Comes with both a PDF for students to fill out, and a teacher’s guide.
Psst: you also might be interested in how much a teen should have saved by 18 .
6. KWHS Organize Your Financial Records
I’m including this financial literacy activity here because I think it’s pretty interesting. This one has your students creating a Statement of Financial Position, meaning they’ll basically fill out their net worth to date.
Eye-opening, to say the least!
Also, a good financial habit to develop (here's why it's important to track your net worth ).
7. Checking Account Balance Activity
This is TD Bank’s free printable resource with activities to teach teens how to balance a checkbook.
Students will complete a check register, learn how to read a checking account statement, and learn how to reconcile a checking register with a checking account.
Important stuff! And just part of the banking activities for kids and teens to learn about.
Hint: this says it’s for Grades 6-8; however, it’s a wonderful opportunity for teens who have yet to learn how to bank. Here are 11 more interactive money activities where kids and teens actually dig in and help make financial decisions around their home.
8. Shark Tank Lesson Plans
I’ve got a whole article filled with the best (free) worksheets, PDFs, and activities I could find having to do with the famous TV show, Shark Tank.
Students can use one of these worksheets to work through a business idea, product ideation, calculating profit, and much more.
For example, Scholastic has a great set of free Shark Tank PDFs and lesson plans to use in high school classrooms.
9. Create a Savings Comic Strip
Your students are tasked with writing a creative savings comic strip, all around different characters working through an important lesson about saving money.
Comes with a teacher’s guide, and student worksheet.
10. Compose a Rap Song or Poem about Paying for College
Students will review what various college payment choices are out there, and learn about each (such as scholarships, grants, loans, etc.).
Then, they’ll have to come up with a rap song or poem to talk about them!
The worksheet comes with a scoring rubric for the whole class to use in a competition.
11. Teach them How to Pay Bills
What is one financial scenarios for students to learn? How to pay bills. Everyone does it.
Paying bills is a critical adult money skill…yet I've seen hardly any lessons around this.
That's why I created a free PDF and activity that will help with how to teach kids how to pay bills . Try it out with a group!
Budgeting Worksheets Printables (PDFs)
This section is all about offering up awesome budgeting worksheet printables to go along with budgeting activities for high school teens.
Pssst: looking for more budgeting scenarios for high school students? Check out my 12 fun budgeting PDFs for students article, and these 4 budget projects for high school students .
1. Family Budget Game
Here’s a game created to help students understand not only budgeting, but budgeting for a family on a low income.
You can click on each of their “Family 1”, “Family 2”, etc. packages, and print out each of the materials. Create four envelopes (or “Family Packets”) for each family, and give each to a group of students.
Each packet includes:
- Family Scenario
- Family Budget Worksheet
- Family Crisis 1 (possible a Family Crisis 2)
- Family Good News
- Family Income
- Family Bills
The group is then in charge of filling out a budget and paying bills based on their family’s means.
This also makes for a good budget simulation for high school students, because it throws crisis situations (and good news situations) that change the dynamics of their “family’s” financial situation, meaning they have to think on their feet about how to move forward.
2. Budget Busters
I would call this activity a money-habits-awareness one.
Because what it focuses on is asking students whether or not they do certain money management habits/behaviors, and they have to forfeit a pretend dollar bill each time they answer “no”.
What are some of these behaviors and habits?
Things like:
- I have a spending plan for my allowance and any earnings from working for others or for myself.
- I know how much I can spend each day/week for snacks.
- I know how much I can spend on clothing each month/year.
Psst: you might want to check out these needs vs. wants budget worksheets, activities, and games .
3. KWHS Comment Contest
Here’s an interesting financial literacy activity – have your students register (for free) to Knowledge @ Wharton High School, read articles about personal finance, and leave a thoughtful comment on something they feel strongly about.
It’s an annual competition, and can definitely get your students interested in learning more about personal finance.
4. Making a Budget
St. Louis Fed has a set of slides, teacher guide, and worksheets to teach kids things like:
- Gross income vs. net income
- Saving money
- Spending money
- Prioritizing using a budget
Financial Literacy Games for High School Students
Financial literacy games are another great activity to guide high school students self-discover vital money life skills.
You’ll definitely want to check out my articles on:
- 19 Free Financial Literacy Games for High School Students
- 11 Budget Games
- 11 Best Business Simulation Games for Kids & Teens
And here’s one more for you:
1. Play a Budgeting Game with PDFs
Have your teens play this free online financial literacy game ( Misadventures in Money Management ), going through Sonya’s avatar.
Then, have them work through these worksheets to understand how to make large-purchase decisions better.
They’ll learn to:
- Think through a large purchase decision
- Plan a large purchase
- How to avoid being pressured into making a large purchase
A final idea? Is to have your teens journal about money. Here are some great journal topics for high school , including the subject of money.
Any one of these financial literacy activities for high school students pdfs will teach teens a money lesson or two that will make an impact in their young adult lives. So, just choose one to start with and go from there!
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- Simple Budgeting Worksheets for Students
- Saving for College
Setting up an effective, realistic budget is just one of the many important life skills that school never properly teaches you how to master. Everybody is so focused on landing their dream job one day that building proper financial habits can get swept under the rug. However, no matter how high your salary, anyone can experience money problems if proper financial habits aren’t in place.
Everyone is different, and, therefore, there’s no such thing as a one-size-fits-all budgeting worksheet. That’s why it’s important to experiment and see which budgeting method works best for you and your current situation and goals.
This article will discuss the importance of budgeting for students and explain several simple budget worksheets to help you improve your money management skills and take control of your personal finances.
- What to Include in a Simple Personal Budget
A budget can be a great tool to help you reach your financial goals. It consists of your income and expenses for a given period and requires you to keep close track of all the money you bring in versus all the money you spend. A budget allows you to gain a better understanding of your financial situation and take control of your financial goals.
With time, sticking to your budget and forming better spending habits can help you save money and start building an emergency savings fund . This is necessary to reach financial security and prevent small emergencies from putting a large financial strain on you. It will also help you recover faster from any unexpected emergencies.
A vital part of setting up a budget is to make sure you are being realistic and accurate. If you’re being too drastic in cutting back on expenses, following your student budget will be short-lived, and you’ll give up before reaping any of the benefits. If you overestimate your income, your budget will hit a stumbling block, and this could also be demotivating. Always remember that making small but lasting steps toward your goals is a more sure way to reach success.
The first step to taking control of your financial future is to track your monthly income. Knowing how much money you have at your disposal each month will help you assign a purpose to each dollar and prevent unnecessary spending.
Your income includes all the money you make during the month, whether from a job, a monthly stipend from your parents or if you just sold something. If your income varies considerably from month to month, it’s best to use a low estimate when planning your monthly budget. This way, you’ll be prepared in case your income is a little lower than usual without having to end up pinching your pennies.
Tracking your expenses is the most important part of the budgeting process. It will allow you to evenly distribute your income throughout the month, monitor areas where you tend to overspend and plan to put some money away in your savings.
Most expenses fall into two categories: recurring and variable expenses. Recurring expenses tend to be a fixed amount each month, such as your rent payment or cellphone bill. These types of expenses are easy to budget for since you know how much you’ll have to pay. Variable expenses tend to be harder to budget for since they vary from month to month. Variable expenses include things like your grocery bill or how much you spend going out with friends.
It can be wise to see your savings account as an expense, as well. As you would pay your bills, put a fixed amount toward your savings account each month. This will help you stay constant in saving money and reach your financial goals faster.
- Common Budget Considerations for Students
College students generally have different kinds of expenses than most people who are later in their lives with established careers. These expenses not only include tuition but also pricey school books at the beginning of the semester, student housing, school meal plans, some money to go out with friends, transportation, and the list goes on.
College life can be expensive, and most students have a much lower income than non-students due to time constraints (studying will take up most of your time, so working full-time will be hard) and not having a degree yet. This makes managing your money extra important.
- Simple Budgets for Students
There are many types of budgets available to help you manage your finances.
- The first one we’ll be discussing is a simple income/expense budget, where you compare your total income to your total expenses and make sure there is room for saving.
- The second method is called the 50/30/20 budget, which ultimately boils down to distributing specific portions of your total income to needs, wants and savings.
- The student loan payoff budget makes adjustments to the 50/30/20 budget to ensure you plan for your student loan payments.
- Lastly, the zero-based budget assigns a purpose to every dollar so that your income minus your expenses equals zero.
- Simple Income/Expense Budget
This type of budget is simple and effective. First, determine your total income for the month. If you work hourly or it’s not a fixed amount for a different reason, take an estimate. As mentioned, make sure your estimate is on the lower end so that you can be prepared for a worst-case scenario.
Second, determine your recurring monthly expenses. These are fixed expenses, and generally, you can’t make any adjustments to them. Next, determine your variable expenses. These are the types of expenses you can adjust if you need to cut back on your spending.
Lastly, subtract your total expenses from your total income. If you get a positive number, then congratulations! You have money left over to save at the end of the month. If you are breaking even, you can cover all expenses, but there’s no room for savings. If the amount is negative, revisit your variable expenses and try to trim them down.
- 50/30/20 Budget
This type of budget plan is a good goal to work toward for students. The objective is to divide your income so that 50% goes to living expenses and needs, 30% goes to wants, such as spending money on hobbies or going out with friends, and 20% goes straight toward savings.
Again, this type of budget should be seen as a goal to work toward since many students only work part-time and don’t make enough income to follow this budget entirely. Keeping this in mind will prevent you from getting discouraged and help you make more manageable strides toward your financial goals.
- Student Loan Payoff Budget
Paying off student loans can be a big stress factor for many students. It can also be hard to determine what your monthly loan payments will be and how much you’ll need to earn to prevent your loans from becoming a big financial strain. A loan payment calculator can give you an estimate to work with. If you’ve exhausted your financial aid — including grants, scholarships, work-study programs, and federal student loans — private loans can help make up the difference.
To budget for your student loan payments, small changes can be made to the 50/30/20 budgeting method. Cut back your wants to 20% and your savings to 10%. This way, you can allocate 20% of your total income to paying off your student loans. If you want to make an even bigger payment, and you are willing to forego a larger portion of your wants, then adjust accordingly. Remember that it’s always wise to pay more than the minimum payment required, and this is the case with credit card debt, as well.
If it’s possible, start making payments toward your student loans while in school, no matter how small. This could have a drastic impact on the amount of compounding interest over the years. The earlier you start managing your college debt , the better.
- The Zero-Based Budget
Simply put, the zero-based budgeting method requires your income and expenses to match. This means that if you subtract your expenses from your income, the answer should be zero. Following a zero-based budget will require you to be very diligent in tracking your income and expenses to be accurate.
If your expenses exceed your income, you will have to find ways to increase your income or decrease your variable expenses. If your income exceeds your expenses, you’ll need to find a place to allocate the extra money to, for example, your savings. Once you keep close track of your expenses, it’s much easier to make smarter financial decisions and save money.
This type of budget helps you know where your money goes and assigns a purpose to every dollar. There is no more losing track of your spending, and no more feeling helpless to control your spending. If you are in need of building better financial habits, this budget is a great place to start.
- Learn More About Student Finances at CollegeFinance.com
College can be intimidating, and many students feel left in the dark and overwhelmed. It’s a big investment, so you want to ensure that you make the right decisions and use all resources at your disposal.
CollegeFinance.com has additional resources for college students to make the most of your college investment and improve your money skills. Not in college just yet? Start planning to optimize your finances before you become a college student.
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Related articles.
Where to Find the Best Scholarships for College Freshmen
Learn about scholarship opportunities for college freshmen and where you can find them.
How to Apply for College Scholarships
College scholarships can help reduce educational expenses. Learn how to find college scholarships and get tips for submitting a winning application.
The Best College Scholarships for High School Students
Here are some of the best college scholarships for high school students and where you can find more helpful resources regarding college finances.
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Calculating loan payments
Using a case study, students explore how the amount borrowed, interest rates, and the term of a loan can increase or decrease the amount of loan payments.
The amount of an installment loan payment amount is the result of several factors.
Essential questions
- How do principal, interest rate, and loan term affect loan payments?
- What criteria do you use to compare loan offers to get the best deal?
- Make informed choices about credit offers
- Calculate monthly payments for loans based on principal, interest rate, and loan term
What students will do
- Calculate and analyze how monthly payments on a loan change based on the principal, interest rate, and term.
- Compare borrowing options to identify the best deal.
- Reflect on ways to reduce the amount owed on a loan.
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Calculating loan payments (guide)
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Calculating loan payments (worksheet)
Note: Please remember to consider your students’ accommodations and special needs to ensure that all students are able to participate in a meaningful way.
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12 Fun Saving and Budgeting Activities for High School Students
Teach teens financial fitness now so they have a prosperous future.
Financial literacy and good habits are critical to young people’s path to adult financial well-being. See how the CFPB can help K-12 financial education in your classroom!
One of the biggest challenges in teaching high school students is choosing how to balance teaching practical life skills and academic knowledge. Even the highest-performing students can struggle with basic financial literacy tasks like budgeting and saving. When students don’t learn those skills, they face the risk of later making uninformed money decisions that can affect the rest of their lives. High schoolers are more than ready to build the executive functioning, financial habits, and long-term decision-making skills needed to gain financial security. But where do teachers begin?
Finding ways to connect financial literacy with the things that are important to students is key. Retirement might be a long way off for students, but they understand the freedom of a car. Do they understand the financial responsibility that comes with it, though? You can help your students identify what is important to them and how to set financial goals to achieve it using technology, classroom lessons, and group discussion.
Try these 12 fun saving and budgeting activities to teach financial literacy in your high school classroom:
1. Create a buying plan.
Have students make a list of up to 10 items they’d like to buy. These items can range in price, but encourage students to think as big as they’d like. Then, ask students to get in groups to identify the things their chosen items have in common and how those items are different. From this exercise, ask students to explain why they chose these items and to answer some other guiding questions. What personal values do these items represent? How will these items help them achieve their goals? Will those items make them feel happy? Then, have students create a buying plan for a few of the objects that they’d like to buy in the next year. Help them decide, based on whether they have a job, receive an allowance, or have a savings account, how they’ll make the purchase and help them tailor each plan to their situation.
2. Walk in someone else’s shoes for a week.
Ask students to estimate how much they think an average person spends in one week. Then, gear up for some research! Put students in groups and assign them different circumstances—single, married, children, student loans, car payments, etc. Using data from news articles and sources, have students create and manage a budget with this worksheet . Do they have enough money to cover their obligations and stick to their budget? Students can tally every expense a particular person may have on any given day (including the small ones that are easy to forget). At the end of the week, students can compare their group’s expenses with their prediction. This activity teaches empathy and financial smarts!
3. Get acquainted with Murphy’s Law.
It’s no secret that things could go wrong. Help students understand and prepare for this. In groups, have students discuss unexpected events they’ve seen their families contend with and share how much money they think it would cost to address those emergencies. Then, help students design a savings “first aid kit .”
4. Get them invested in making their money grow.
Tell students they are going to begin saving in an account with compounding interest. Students pick cards to determine their account’s compound interest rate. At first, the idea might seem basic—people with cards that have higher interest rates may earn more over time. But activate your students’ critical thinking skills by having them predict the difference between their returns on their savings and their peers’. Run the experiment over the course of one week with each school day acting as 5–10 years. Teach students how to predict and then calculate returns on savings using a compounding calculator , and watch how the interest compounds to grow exponentially over time.
5. Give students a budget reality check.
What kind of lifestyle do your students want? They can explore options and expectations (what kind of income they’ll need) with this reality check tool . How does this impact their career plans? What kind of wages will they need? Be ready: Enlightening discussions ahead!
6. Teach grocery shopping and meal prep.
Challenge your students to meal prep on a budget! Either ask families to sign permission slips and send money for a real trip to the grocery store or use an online service to make a hypothetical grocery list. Help students budget for and prepare their own lunches to last one week. At the end of the week, students assess how they used their money: Did they have enough food or too much? Was the food they purchased nutritious? This game helps students understand how financial habits support wellness as well as consider how food access and financial health are linked.
7. Help them understand how needs and wants have changed.
A photo slideshow can show how humankind’s lifestyles have changed over time. For example, in the past, a smartphone was not considered a need. Have students predict what the needs of the future will be, then show them artifacts from history and contemporary times to sort into needs or wants piles. Reflecting on needs versus wants is an important way to sharpen students’ executive functioning and help them build the power of metacognition—considering their thoughts, habits, and choices.
8. Show them that saving should be a priority .
It is important for students to practice paying themselves first . For this activity, randomly assign each student an imaginary savings account and an amount of money that they’ll put into their account from every “paycheck.” Have them research and compare their circumstances. Then, teach them to calculate how much money they put away every year. Let every school day represent one year and after six weeks graph savings accounts as a class to see how much everyone earned by paying themselves first. Then, teach students how to calculate their total savings into monthly amounts and compare their monthly savings budget with their monthly budget .
9. Make budgeting concepts fun with interactive games.
This Bouncing Ball Budgets game is designed for students to think about past spending decisions, and how to think about spending habits in new ways. Tossing the ball from one to the other and answering money habit questions, they’ll be actively listening, engaged in teamwork, and thinking critically—all while having fun!
10. Engage students with the game of chance.
The National Standards for Financial Literacy suggest that all teens should weigh the cost of education and the income they want from their careers. Have students envision their future life and write down: 1) a profession that they are interested in (including stay-at-home parent); 2) the number of kids they think they want; and 3) where they want to live. Then, have students create a financial-future map, including a plan for their education and a household budget based on their future salaries. Make it fun by using photos, magazines, and art materials to create vision boards along with their money maps!
11. Introduce the idea of risk.
Like the tortoise and the hare, there are different approaches to long-term saving. Randomly assign students either high-risk or low-risk investing strategies. Next, have them work in teams to calculate the savings over five, 10, 20, 30, and 40 years. Finally, have them reflect on which strategy would be most appropriate based on their goals and for stage of life.
12. Build the power of positive belief.
Inspiration goes a long way: read articles to students, show them YouTube videos, and bring in speakers who have either turned their financial health around or earned wealth with good habits to speak to your class. Ask the question, “What would you do with one million dollars?” and then give them time to reflect, journal, or create and share a vision board. Hold one-on-one or smaller group sessions with students to help them devise individualized plans.
With a little empathy, time, and positive thinking, you can teach your students how to build budgeting and savings habits that work for them.
Financial literacy and good habits are critical to young people’s path to adult financial well-being. See how the CFPB can help you teach K–12 financial education in your classroom!
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PAYING FOR COLLEGE Lessons and Worksheets
Do your students understand the cost of college, and also understand scholarships, grants, savings, and loans? Use these worksheets, lessons, resources, and finance activities to help teach your students about paying for college.
UNDERSTANDING COLLEGE COSTS
After high school, many teens have varied ideas and important things to consider about going to college. Going to college may be expensive, as the cost of college is rising every year, and so students need to examine the options for paying for and financing their education. The positive is that college graduates in general earn more than those with only a high school diploma.
Paying for a college education will be the first major financial decision for many students. Should you consider student loans? What should you know before taking out a loan? What happens after college and you need to then pay off your debt? Can you possibly attend college without taking any student loans at all?
Use the following lessons to teach and learn more about paying for college.
Paying for College Lessons and Worksheets
College Budget
Many college students discover too late that they need to learn how to budget their money. Use this budget lesson plan and worksheet on the subject of college budgeting to help teach related principles.
ADDITIONAL LESSON RESOURCES
Paying for College
Students will explore different ways to pay for college tuition and fees, learn about federal grants and loans, private loans and the 529 education savings plan. By exposing students to the various options they have, the lesson will help students feel more empowered about where they can go for education and how to pay for it.
How Will I Pay for College?
Students will learn about current trends in student borrowing and determine a reasonable debt load. College costs have escalated over the past two decades, and more and more students are relying on student loans to cover the costs. Therefore, it is important to carefully consider the costs of college, your anticipated career income, and how to best finance those college expenses.
The Real Cost of College
This lesson teaches high school students the basics of budgeting, including understanding how revenue and expenses interact. Students learn about budgeting for college expenses and apply what they learn to real-life scenarios. They learn about a college student who consults with a financial planner to help him with strategies to manage his budget. Students create different budget scenarios reflecting what it really costs to go to college, using online resources that they research independently.
Know More No Less - How To Get EXACTLY What You Need Financially To Go To College
These lessons enable educators to quickly teach students basic skills for seeking financial aid. The lessons encourage students to better understand the basic financial requirements of attending college. Students are also encouraged to minimize their loan requirements by seeking non-loan sources to finance their post-secondary education.
Options for Paying for College: Loans and Grants to Consider Paying for college is stressful in any situation, but with economic hard times facing many people, it becomes even more important to look for options that can help you to get your college student through school, or help you to pay for your own schooling costs. Competition for resources to pay for school is fiercer than ever, which means that students need to act quickly and put forth his or her best offer.
529 College Savings Plans This state-sponsored plan, the 529 college savins plan, available in every state, lets you, grandparents, relatives, or anybody else contribute at any time for saving for college. The interest is all tax-free, and when the student draws out money for college, it is tax-free as well.
Paying for College with Student Loans Not many students are fortunate enough to have funds ready and available as they graduate from high school. Many college and university candidates have no choice but to apply for a loan. For many, this means an expensive bank loan, but those who have truly done their homework know that a government student loan is the best answer.
Direct Loans for Students Direct Loans provided by the Department of Education is a Federal Student Aid, (also referred to as FSA) program. Applying for Direct Loans is a simple process. To apply for a Direct Loan students need to complete one application, the FAFSA (Free Application for Federal Student Aid).
The Problem of Unpaid Student Loans Many students take advantage of government loans. With substantial loans, they are able to complete their studies without the worry of a financial burden, knowing that when they graduate and find employment, they can then make arrangements for repaying the loan. Unfortunately many find that their plans do not materialize in the way they had predicted, and a number of unforeseen circumstances can prevent them from doing so.
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Free Printable Consumer Math Worksheets for Students
By Sara Dennis on November 7, 2022
Are you looking for consumer math worksheets that will teach your children the skills they need to handle real life situations? Then you’ll love these free consumer math worksheets for elementary, middle school, and high school students.
Consumer Math Worksheets
These worksheets break down basic math skills into easily digestible consumer math lessons. The lessons will teach your kids about personal finance, sales tax, and how to set up a monthly budget.
Plus, you’ll find real-life examples to help your kids develop their problem-solving skills.
What is consumer math?
Consumer math is a branch of maths that focuses on teaching kids how to use their basic math skills in real world situations. Kids learn financial literacy and what some people call kitchen math. They’ll learn how to budget, create a grocery list, balance their checking account, and how to read account statements.
Why Teaching Students Consumer Math is Important
Consumer mathematics is a critical branch of math to teach your kids. Kids will learn a variety of topics that they’ll use throughout their life, such as figuring out a sale price, a credit score, hourly rate, and installment loans. Teaching lifeskills like consumer math will set your student up for success.
These skills will allow your kids to make wise financial decisions. We used Dave Ramsey’s personal finance course when my daughter was in high school. I plan to take my next child through it when she gets in high school too.
If you’re on board to teach your kids all about consumer math, then these worksheets can help. You’ll find banking worksheets: deposits, withdrawls, balancing a checkbook and writing checks practice pages.
You can also print math worksheets for calculating discounts, taxes, price comparison, interest, and more!
Banking Worksheets
This group of money math worksheets focuses on banking worksheets that will teach your kids how to balance a checkbook, keep track of deposits and withdrawals, and how to write a check as well.
You can use these worksheets to create a math course, supplement a homeschool math curriculum , or create a money lesson.
Deposits and Withdrawals Worksheets
Most people in the world open a bank account at some time. So your kids will need to know how to keep track of a checking account and a savings account. They’ll also need to know how to read account statements.
Deposits and Withdrawals Sort – Kids will read through the different task cards to determine if they should deposit the money into their account or make a withdrawal.
Withdrawal and Deposit Warmup – This money worksheet focuses on making sure kids understand the vocabulary involved in withdrawals and deposits.
Balancing a Checkbook Worksheets
Teach your kids how to balance a checkbook using one of these fun consumer math worksheets. The best part is that your kids will use basic math skills to complete these lessons.
Balancing a Checkbook – This consumer math worksheet uses basic operations to have kids calculate a variety of deposits and withdrawals. It’s an excellent introduction to balancing a checkbook.
Balancing a Checkbook – Give your kids the opportunity to practice balancing a checkbook before they learn the hard way with this fun money worksheet.
Writing Checks Worksheets
Writing checks is becoming a lost skill as most adults use debit and credit cards to pay for groceries at the grocery store. However, there are still times your children will need to write a check. These worksheets will ensure your kids know how to write a check properly.
How to Write a Check – You’ll find various resources to help you teach your kids everything they need to know about checks and checking accounts, including answer keys to the worksheets.
How to Write a Check – This website shares a variety of charts and worksheets to help you teach your children how to write a check properly.
Sales Purchases Worksheets
Do you have kids struggling as they attempt to learn how to calculate discounts, taxes, or tips? Then you’ve come to the right place. These worksheets will help your kids figure out the final prices and the total cost of items.
Calculate Discounts Worksheets
Help kids figure out how to calculate the final price of an object when they apply a coupon or discount. It’s a valuable skill your kids will use for years to come!
How Much Does It Cost With Coupons – Figure out how much items at the store will cost after you apply the coupons. These word problems use an interactive whiteboard that you can download to use in your lesson plan.
How to Calculate Discounts – Help your kids learn what 30% off or 50% off actually means using this fun worksheet that comes in a pdf format.
Find the Sale Price Worksheets
Teach your kids how to calculate the actual price of an item on sale with these money math worksheets. It’s one of the first stepping stones to financial literacy!
Finding Discount and Sales Price – Help your kids learn how to calculate both the discount and the sale price when they’re shopping.
Finding Sales Price – This math worksheet will help your kids learn how to find the actual price of an item on sale.
Sales Tax Worksheets
Does your state have sales tax? Then teach your children how to calculate the total amount of money they’ll need when they shop. It’s a real-world problem your kids will use constantly.
How to Calculate Tax, Tips, and Sales Worksheet – This freebie pdf will teach your kids how to calculate tax, tiles, and the sale price. It’s a useful money lesson to complete with your children.
6th Grace Shopping Worksheet: Tax, Tips, Discounts – This shopping worksheet uses only the basic math that 6th and 7th graders have learned. It will quickly have the kids calculating taxes, tips, and discounts like a pro.
Price Comparison Worksheets
Another useful skill children need to learn is price comparison. These sheets will teach your kid how to calculate unit prices so your child can accurately compare the prices of items on a shopping list.
Unit Price Comparison – It can take a long time for kids to learn to compare unit prices and purchase the lowest-priced item if you don’t teach them how. And this worksheet does just that. It teaches kids how to figure out the lowest unit price.
Grocery Store Price Comparison Activity – Use online grocery stores to compare the prices of the kids’ favorite items. Kids can work in cooperative groups or independently.
Earning Interest
You don’t need online textbooks to teach your kids about earning interest. Instead, check out these fabulous resources on consumer mathematics that will teach your kids all about interest rates.
What’s the Interest Worksheets
Do your kids know how to calculate the interest rate on credit cards or savings accounts? These resources will teach your kids about interest rates on credit cards as well as simple interest rates.
What Interest Rate Do Consumers Pay on Credit Cards – The worksheet introduces kids to the concept of a credit score as it teaches them about credit cards.
Simple and Compound Interest Rate: Savings Account and Car Loan – Learn all about the difference between a simple interest rate and a compound interest rate as they apply to a savings account and a car loan.
Monthly Payments Worksheets
Monthly payments are a key part of an adult’s monthly budget. If monthly payments are too high, a person will keep sinking further into debt. These worksheets will guide your kids through the real-life situations they need to understand to keep their finances healthy.
Installment Loan Payments Worksheets
Installment payments are loans that allow a person to borrow a specific amount of money and make fixed payments over time to repay the loan. These worksheets will introduce your kids to the concept and walk them through the pros and cons.
Closed-End Credit Installment Loans – This self-teaching worksheet will walk your kids through the steps involved in an installment loan, such as the down payment, the amount financed, and the finance charge.
Revolving Credit Versus Installment Loans: You Decide – This paid resource teaches kids about the differences between revolving credit and installment loans.
Do your kids understand the concept of monthly payments and calculate what the monthly payment would be on a loan? Then you need these consumer math worksheets!
This or That? Calculating Monthly Payments from Simple Interest Loans – Kids will need to determine what monthly payment goes into different lifestyle choices as they choose between different items, such as cars.
Let’s Go Car Shopping: Calculating Interest and Monthly Payments – Teach your kids all about purchasing a car with this fabulous guide to car shopping.
Financing Worksheets
Financing worksheets will help your kids learn about finance charges and car loans. This way, your children will be able to make wise financial decisions as adults.
Finance Charges Worksheets
Do you know what the finance charges are for items you purchase with a loan? It helps to find out so that you know the actual price of the item you bought. These resources will teach the concept to your kids.
Finance Charges Puzzle – This paid puzzle will teach your kids how to calculate the finance charge on large purchases bought with a loan.
Finance Charges Practice & Challenge – Another favorite resource, this paid worksheet will give your kids two problems to help them learn how to calculate finance charges.
Car Loan Worksheets
These car loan worksheets are like having a secret math tutor for your kids. They’ll learn how to calculate the payments on their dream car, never realizing they’re mastering basic math and honing problem-solving skills.
Dream Car Loan Activity – This short math activity will have your kids figuring out interest rates and monthly payments.
Online Car Loan and Depreciation Tools – Help your kids learn how to make wise purchasing decisions when buying their first cars by walking them through this car loan worksheet.
Creating a Budget Worksheet
Do your kids know how to set and maintain a monthly budget? These worksheets will walk your kids through real-life situations in order to engage your kids and teach them this critical life skill.
Creating a Budget Using a Narrative – Kids will read a narrative and then use the narrative to create a budget for the fictional character.
Dream Summer Vacation Budget Worksheet – Combine math, economics, and geography as you assign your children to figure out the budget for their dream summer vacation.
In Conclusion
Learning about consumer math while still in school will help prepare your student for life as an adult. Building financial literacy now is a key to success later in life.
If you are teaching money to younger students, how about playing some money games for kids ? You can also use money coloring pages for fun ways to teach money . If you have younger children, doing a color by coin worksheet cab ne fun and helpful.
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Sara Dennis is a veteran homeschool mom of six who’s still homeschooling her two youngest kids after the older four have graduated, entered college, and moved on to adult life. She blogs at Classically Homeschooling .
Be sure to check out our open and go homeschool curriculum and resources over at www.dailyskillbuilding.com
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Refunds received in 2022.
Refunds received after 2022 but before your income tax return is filed.
Refunds received after 2022 and after your income tax return is filed.
Credit recapture.
Amounts that don't reduce qualified education expenses.
Coordination with Pell grants and other scholarships.
Sports, games, hobbies, and noncredit courses.
Comprehensive or bundled fees.
Completion of first 4 years.
Enrolled at least half-time.
Expenses paid by dependent.
Expenses paid by you.
Expenses paid by others.
Tuition reduction.
Form 1098-T.
Modified adjusted gross income (MAGI).
MAGI when using Form 1040 or 1040-SR.
Earned income.
Full-time student.
Claiming the Credit
What is the tax benefit of the lifetime learning credit?
Overview of the lifetime learning credit for 2022.
Who Can Claim the Credit?
Who is an eligible student.
- Worksheet 3-1. MAGI for the Lifetime Learning Credit
- Table 4-1. Student Loan Interest Deduction at a Glance
Your dependent.
Reasonable period of time.
Eligible student.
Related person.
Qualified employer plan.
Adjustments to Qualified Education Expenses
Loan origination fee.
Capitalized interest.
Interest on revolving lines of credit.
Interest on refinanced and consolidated student loans.
Allocating Payments Between Interest and Principal
Don't include as interest, when must interest be paid.
Claiming you as a dependent.
Interest paid by others.
No Double Benefit Allowed
Form 1098-E.
MAGI when using Form 1040-NR.
Which Worksheet To Use
Claiming the deduction.
Private educational lender.
Educational organization described in section 170(b)(1)(A)(ii).
Section 501(c)(3) organization.
Refinanced Loan
Student loan repayment assistance.
What is the tax benefit of the Coverdell ESA?
Designated beneficiary.
Contributions to a qualified tuition program (QTP).
Eligible postsecondary school.
Eligible elementary or secondary school.
Half-time student.
Qualified Elementary and Secondary Education Expenses
When contributions are considered made.
Limit for each designated beneficiary.
Limit for each contributor.
Reduced limit.
- Worksheet 6-1. MAGI for a Coverdell ESA
- Worksheet 6-2. Coverdell ESA Contribution Limit—Illustrated
Figuring and reporting the additional tax.
Members of the beneficiary's family.
Military death gratuity.
Changing the Designated Beneficiary
Transfer because of divorce.
Adjusted qualified education expenses (AQEE).
Tax-Free Distributions
Excess distribution.
Earnings and basis.
Figuring the Taxable Portion of a Distribution
Coordination with american opportunity and lifetime learning credits, coordination with qualified tuition program (qtp) distributions, losses on coverdell esa investments.
Figuring the additional tax.
Exception for Transfer to Surviving Spouse or Family Member
How to figure the taxable earnings.
What is the tax benefit of a QTP?
How Much Can You Contribute?
Recontribution of refunded amounts.
Earnings and return of investment.
Taxable earnings.
Coordination With Coverdell ESA Distributions
Losses on qtp investments, figuring the amount not subject to the 10% tax, reporting early distributions.
Qualified U.S. savings bonds.
Effect of the Amount of Your Income on the Amount of Your Exclusion
Claiming the exclusion.
Educational assistance program.
Educational assistance benefits.
Qualified education loan.
Benefits over $5,250.
Working condition fringe benefit.
What is the tax benefit of taking a business deduction for work-related education?
Education Required by Employer or by Law
Maintaining skills vs. qualifying for new job.
Education during temporary absence.
Education during indefinite absence.
Certification in a new state.
Bar or CPA Review Course
Teaching and related duties.
Deductible expenses.
Nondeductible expenses.
Unclaimed reimbursement.
Temporary basis.
Attendance not on a temporary basis.
Using your car.
Mainly personal travel.
Cruises and conventions.
50% limit on meals.
Travel as Education
Amounts that don't reduce qualifying work-related education expenses.
Accountable plan rules not met.
Expenses equal reimbursement.
Excess expenses.
Allocating your reimbursements for meals.
Reimbursements for nondeductible expenses.
Self-Employed Persons
Armed forces reservists, performing artists, and fee-basis officials, impairment-related work expenses.
Examples of records to keep.
Preparing and filing your tax return.
Free options for tax preparation.
Using online tools to help prepare your return.
Need someone to prepare your tax return?
Coronavirus.
Employers can register to use Business Services Online.
IRS social media.
Watching IRS videos.
Online tax information in other languages.
Free Over-the-Phone Interpreter (OPI) Service.
Accessibility Helpline available for taxpayers with disabilities.
Getting tax forms and publications.
Getting tax publications and instructions in eBook format.
Access your online account (individual taxpayers only).
Tax Pro Account.
Using direct deposit.
Getting a transcript or copy of a return.
Reporting and resolving your tax-related identity theft issues.
Ways to check on the status of your refund.
Making a tax payment.
What if I can’t pay now?
Filing an amended return.
Checking the status of your amended return.
Understanding an IRS notice or letter you’ve received.
Contacting your local IRS office.
How Can You Learn About Your Taxpayer Rights?
What can tas do for you, how can you reach tas, how else does tas help taxpayers, tas for tax professionals, low income taxpayer clinics (litcs).
Academic period:
Adjusted qualified education expenses (AQEE):
Candidate for a degree:
Designated beneficiary:
Eligible educational institution:
Eligible student:
Half-time student:
Modified adjusted gross income (MAGI):
Qualified education expenses:
Publication 970 (2022), Tax Benefits for Education
For use in preparing 2022 Returns
Publication 970 - Introductory Material
For the latest information about developments related to Pub. 970, such as legislation enacted after it was published, go to IRS.gov/Pub970 .
Student loan interest deduction. For 2022, the amount of your student loan interest deduction is gradually reduced (phased out) if your MAGI is between $70,000 and $85,000 ($145,000 and $175,000 if you file a joint return). You can’t claim the deduction if your MAGI is $85,000 or more ($175,000 or more if you file a joint return). See chapter 4 .
Education savings bond program. For 2022, the amount of your education savings bond interest exclusion is gradually reduced (phased out) if your MAGI is between $85,800 and $100,800 ($128,650 and $158,650 if you file a joint return). You can't exclude any of the interest if your MAGI is $100,800 or more ($158,650 or more if you file a joint return). See chapter 9 .
Business deduction for work-related education. Generally, if you claim a business deduction for work-related education and you drive your car to and from school, the amount you can deduct for miles driven from January 1, 2022, through June 30, 2022, is 58.5 cents a mile. The amount you can deduct for miles driven from July 1, 2022, through December 31, 2022, is 62.5 cents a mile. See chapter 11 .
Form 1098-T, Tuition Statement. When figuring an education credit, use only the amounts you paid and are deemed to have paid during the tax year for qualified education expenses. In most cases, the student should receive Form 1098-T from the eligible educational institution by January 31, 2023. However, the amount on Form 1098-T might be different from the amount you actually paid and are deemed to have paid. In addition, Form 1098-T should give you other information for that institution, such as adjustments made for prior years; the amount of scholarships or grants, reimbursements, or refunds; and whether the student was enrolled at least half-time or was a graduate student. The eligible educational institution may ask for a completed Form W-9S, Request for Student's or Borrower's Taxpayer Identification Number and Certification, or similar statement to obtain the student's name, address, and taxpayer identification number.
Form 1098-T requirement. To be eligible to claim the American opportunity credit or lifetime learning credit, the law requires a taxpayer (or a dependent) to have received Form 1098-T, Tuition Statement, from an eligible educational institution, whether domestic or foreign. However, you may claim a credit if the student doesn't receive Form 1098-T because the student's educational institution isn't required to furnish Form 1098-T to the student under existing rules (for example, if the student is a qualified nonresident alien, has qualified education expenses paid entirely with scholarships, has qualified education expenses paid under a formal billing arrangement, or is enrolled in courses for which no academic credit is awarded). If a student's educational institution isn't required to provide Form 1098-T to the student, you may claim a credit without Form 1098-T if you otherwise qualify, can demonstrate that you (or a dependent) were enrolled at an eligible educational institution, and can substantiate the payment of qualified tuition and related expenses.You may also claim a credit if the student attended an eligible educational institution required to furnish Form 1098-T but the student doesn’t receive Form 1098-T before you file your tax return (for example, if the institution is otherwise required to furnish Form 1098-T and doesn’t furnish it or refuses to do so) and you take the following required steps: After January 31, 2023, but before you file your 2022 tax return, you or the student must request that the educational institution furnish Form 1098-T. You must fully cooperate with the educational institution's efforts to gather the information needed to furnish Form 1098-T. You must also otherwise qualify for the benefit, be able to demonstrate that you (or a dependent) were enrolled at an eligible educational institution, and substantiate the payment of qualified tuition and related expenses.
Educational institution's EIN required. To claim the American opportunity credit, you must provide the educational institution's employer identification number (EIN) on your Form 8863. You should be able to obtain this information from Form 1098-T or the educational institution. See chapter 2 .
Form 8862 may be required. If your American opportunity credit was denied or reduced for any reason other than a math or clerical error for any tax year beginning after 2015, you must attach a completed Form 8862, Information To Claim Certain Credits After Disallowance, to your tax return for the next year for which you claim the credit. See chapter 2 .
Ban on claiming the American opportunity credit. If you claim the American opportunity credit even though you're not eligible, you may be banned from claiming the credit for 2 or 10 years depending on your conduct. See chapter 2 .
Taxpayer identification number (TIN) needed by due date of return. If you haven’t been issued a TIN by the due date of your 2022 return (including extensions), you can't claim the American opportunity credit on either your original or an amended 2022 return. Also, the American opportunity credit isn't allowed on either your original or an amended 2022 return for a student who hasn’t been issued a TIN by the due date of your return (including extensions). See chapter 2 .
Higher education emergency grants. Emergency financial aid grants under the following are not included in your gross income.
The CARES Act.
The Coronavirus Response and Relief Supplemental Appropriations Act, 2021.
The American Rescue Plan Act of 2021.
Also, for purposes of the American opportunity tax credit (see chapter 2) and lifetime learning credit (see chapter 3), a student does not reduce an amount of qualified tuition and related expenses by the amount of an emergency financial aid grant. For more information, see Higher Education Emergency Grants Frequently Asked Questions .
Coordination with Pell grants and other scholarships or fellowship grants. It may benefit you to choose to include otherwise tax-free scholarships or fellowship grants in income. This may increase your education credit and lower your total tax or increase your refund. See Coordination with Pell grants and other scholarships or fellowship grants in chapter 2 and chapter 3 .
Student loan interest deduction. You can’t deduct as interest on a student loan any interest paid by your employer after March 27, 2000, and before January 1, 2026, under an educational assistance program. See chapter 4 .
Student loan forgiveness. The American Rescue Plan Act of 2021 modified the treatment of student loan forgiveness for discharges in 2021 through 2025. See chapter 5 .
Achieving a Better Life Experience (ABLE) account. This is a savings account for individuals with disabilities and their families. Distributions are tax free if used to pay the beneficiary's qualified disability expenses, which may include education expenses. For more information, see Pub. 907, Tax Highlights for Persons With Disabilities.
Estimated tax payments. If you have taxable income from any of your education benefits and the payer doesn't withhold enough income tax, you may need to make estimated tax payments. For more information, see Pub. 505, Tax Withholding and Estimated Tax.
Employer-provided educational assistance benefits. Employer-provided educational assistance benefits include payments made after March 27, 2020, and before January 1, 2026, for principal or interest on any qualified education loan you incurred for your education. See chapter 10 .
Miscellaneous itemized deductions. For tax years beginning after 2017 and before 2026, you no longer deduct work-related education expenses as a miscellaneous itemized deduction subject to a 2%-of-adjusted-gross-income floor. See chapter 11 .
Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing & Exploited Children® (NCMEC) . Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (800-843-5678) if you recognize a child.
This publication explains tax benefits that may be available to you if you are saving for or paying education costs for yourself or, in many cases, another student who is a member of your immediate family. Most benefits apply only to higher education.
Chapter 1 explains the tax treatment of various types of educational assistance, including scholarships, fellowship grants, and tuition reductions.
Two tax credits for which you may be eligible are explained in chapter 2 and chapter 3 . These benefits, which reduce the amount of income tax you may have to pay, are:
The American opportunity credit, and
The lifetime learning credit.
Nine other types of benefits are explained in chapters 4 through 11. These benefits, which reduce the amount of income tax you may have to pay, are:
Deduct student loan interest;
Receive tax-free treatment of a canceled student loan;
Receive tax-free student loan repayment assistance;
Establish and contribute to a Coverdell education savings account (ESA), which features tax-free earnings;
Participate in a qualified tuition program (QTP), which features tax-free earnings;
Take early distributions from any type of individual retirement arrangement (IRA) for education costs without paying the 10% additional tax on early distributions;
Cash in savings bonds for education costs without having to pay tax on the interest;
Receive tax-free education benefits from your employer; and
Claim a business deduction for work-related education.
You generally can't claim more than one of the benefits described in the list above for the same qualifying education expense.
Some of the features of these benefits are highlighted in the Appendix , later in this publication. This general comparison table may guide you in determining which benefits you may be eligible for and which chapters you may want to read.
After you estimate your education tax benefits for the year, you may be able to reduce the amount of your federal income tax withholding. Also, you may want to recheck your withholding during the year if your personal or financial situation changes. For more information, see Pub. 505, Tax Withholding and Estimated Tax.
In this publication, wherever appropriate, we have tried to use the same or similar terminology when referring to the basic components of each education benefit. Some of the terms used are:
Qualified education expenses,
Eligible educational institution, and
Modified adjusted gross income.
Even though the same term, such as qualified education expenses, is used to label a basic component of many of the education benefits, the same expenses aren't necessarily allowed for each benefit. For example, the cost of room and board is a qualified education expense for the qualified tuition program, but not for the education savings bond program.
Many of the terms used in the publication are defined in the glossary near the end of the publication. The glossary isn't intended to be a substitute for reading the chapter on a particular education benefit, but it will give you an overview of how certain terms are used in discussing the different benefits.
We welcome your comments about this publication and your suggestions for future editions.
You can send us comments through IRS.gov/FormComments . Or, you can write to the Internal Revenue Service, Tax Forms and Publications, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224.
Although we can’t respond individually to each comment received, we do appreciate your feedback and will consider your comments and suggestions as we revise our tax forms, instructions, and publications. Don’t send tax questions, tax returns, or payments to the above address.
If you have a tax question not answered by this publication or the How To Get Tax Help section at the end of this publication, go to the IRS Interactive Tax Assistant page at IRS.gov/Help/ITA where you can find topics by using the search feature or viewing the categories listed.
Go to IRS.gov/Forms to download current and prior-year forms, instructions, and publications.
Go to IRS.gov/OrderForms to order current forms, instructions, and publications; call 800-829-3676 to order prior-year forms and instructions. The IRS will process your order for forms and publications as soon as possible. Don’t resubmit requests you’ve already sent us. You can get forms and publications faster online.
Useful Items
Publication
463 Travel, Gift, and Car Expenses
525 Taxable and Nontaxable Income
550 Investment Income and Expenses
590-A Contributions to Individual Retirement Arrangements (IRAs)
590-B Distributions from Individual Retirement Arrangements (IRAs)
Form (and Instructions)
1040 U.S. Individual Income Tax Return
1040-NR U.S. Nonresident Alien Income Tax Return
1040-SR U.S. Tax Return for Seniors
2106 Employee Business Expenses
5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts
8815 Exclusion of Interest From Series EE and I U.S. Savings Bonds Issued After 1989
8863 Education Credits
See chapter 12 for information about getting these publications and forms.
1. Scholarships, Fellowship Grants, Grants, and Tuition Reductions
Individual retirement arrangements (IRAs). You can set up and make contributions to an IRA if you receive taxable compensation. A scholarship or fellowship grant is generally taxable compensation only if it is shown in box 1 of your Form W-2, Wage and Tax Statement. However, for tax years beginning after 2019, certain non-tuition fellowship and stipend payments not reported to you on Form W-2 are treated as taxable compensation for IRA purposes. These include amounts paid to you to aid you in the pursuit of graduate or postdoctoral study and included in your gross income under the rules discussed in this chapter. Taxable amounts not reported to you on Form W-2 are generally included in gross income as discussed later under Reporting Scholarships and Fellowship Grants . For more information about IRAs, see Pub. 590-A and Pub. 590-B.
Also, for purposes of the American opportunity credit (see chapter 2) and lifetime learning credit (see chapter 3), a student does not reduce an amount of qualified tuition and related expenses by the amount of an emergency financial aid grant. For more information, see Higher Education Emergency Grants Frequently Asked Questions .
This chapter discusses the income tax treatment of various types of educational assistance you may receive if you are studying, teaching, or researching in the United States. The educational assistance can be for a primary or secondary school, a college or university, or a vocational school. Included are discussions of:
Scholarships;
Fellowship grants;
Need-based education grants, such as a Pell grant; and
Qualified tuition reductions.
Special rules apply to U.S. citizens and resident aliens who have received scholarships or fellowship grants for studying, teaching, or researching abroad. For information about these rules, see Pub. 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad.
Scholarships and Fellowship Grants
A scholarship is generally an amount paid or allowed to, or for the benefit of, a student (whether an undergraduate or a graduate) at an educational institution to aid in the pursuit of his or her studies.
A fellowship grant is generally an amount paid for the benefit of an individual to aid in the pursuit of study or research.
The amount of a scholarship or fellowship grant includes the following.
The value of contributed services and accommodations. This includes such services and accommodations as room (lodging), board (meals), laundry service, and similar services or accommodations that are received by an individual as a part of a scholarship or fellowship grant.
The amount of tuition, matriculation, and other fees that are paid for or remitted to the student to aid the student in pursuing study or research.
Any amount received in the nature of a family allowance as a part of a scholarship or fellowship grant.
Tax-Free Scholarships and Fellowship Grants
A scholarship or fellowship grant is tax free (excludable from gross income) only if you are a candidate for a degree at an eligible educational institution.
A scholarship or fellowship grant is tax free only to the extent :
It doesn't exceed your qualified education expenses;
It isn't designated or earmarked for other purposes (such as room and board), and doesn't require (by its terms) that it can't be used for qualified education expenses; and
It doesn't represent payment for teaching, research, or other services required as a condition for receiving the scholarship. For exceptions, see Payment for services , later.
Use Worksheet 1-1 to figure the amount of a scholarship or fellowship grant you can exclude from gross income.
You are a candidate for a degree if you:
Attend a primary or secondary school or are pursuing a degree at a college or university; or
Attend an educational institution that:
Provides a program that is acceptable for full credit toward a bachelor's or higher degree, or offers a program of training to prepare students for gainful employment in a recognized occupation; and
Is authorized under federal or state law to provide such a program and is accredited by a nationally recognized accreditation agency.
An eligible educational institution is one whose primary function is the presentation of formal instruction and that normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it regularly carries on its educational activities.
For purposes of tax-free scholarships and fellowship grants, these are expenses for:
Tuition and fees required to enroll at or attend an eligible educational institution; and
Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. These items must be required of all students in your course of instruction.
Qualified education expenses don't include the cost of:
Room and board,
Clerical help, or
Equipment and other expenses that aren't required for enrollment in or attendance at an eligible educational institution.
Generally, you can't exclude from your gross income the part of any scholarship or fellowship grant that represents payment for teaching, research, or other services required as a condition for receiving the scholarship. This applies even if all candidates for a degree must perform the services to receive the degree. However, see Exceptions next.
You don't have to treat as payment for services the part of any scholarship or fellowship grant that represents payment for teaching, research, or other services if you receive the amount under:
The National Health Service Corps Scholarship Program,
The Armed Forces Health Professions Scholarship and Financial Assistance Program, or
A comprehensive student work-learning-service program (as defined in section 448(e) of the Higher Education Act of 1965) operated by a work college (as defined in that section).
You received a scholarship of $2,500. The scholarship wasn't received under any of the exceptions mentioned above. As a condition for receiving the scholarship, you must serve as a part-time teaching assistant. Of the $2,500 scholarship, $1,000 represents payment for teaching. The provider of your scholarship gives you a Form W-2 showing $1,000 as income. Your qualified education expenses were at least $1,500. Assuming that all other conditions are met, the most you can exclude from your gross income is $1,500. The $1,000 you received for teaching must be included in your gross income.
You are a candidate for a degree at a medical school. You receive a scholarship (not under any of the exceptions mentioned above) for your medical education and training. The terms of your scholarship require you to perform future services. A substantial penalty applies if you don't comply. The entire amount of your grant is taxable as payment for services in the year it is received.
Athletic Scholarships
An athletic scholarship is tax free only if and to the extent it meets the requirements discussed earlier.
You can use Worksheet 1-1 to figure the tax-free and taxable parts of your athletic scholarship.
Worksheet 1-1. Taxable Scholarship and Fellowship Grant Income
If and to the extent your scholarship or fellowship grant doesn't meet the requirements described earlier, it is taxable and must be included in gross income. You can use Worksheet 1-1 to figure the tax-free and taxable parts of your scholarship or fellowship grant.
Reporting Scholarships and Fellowship Grants
Whether you must report your scholarship or fellowship grant depends on whether you must file a return and whether any part of your scholarship or fellowship grant is taxable.
If your only income is a completely tax-free scholarship or fellowship grant, you don't have to file a tax return and no reporting is necessary. If all or part of your scholarship or fellowship grant is taxable and you are required to file a tax return, report the taxable amount as explained below. You must report the taxable amount whether or not you received a Form W-2. If you receive an incorrect Form W-2, ask the payer for a corrected one.
For information on whether you must file a return, see Pub. 501, Dependents, Standard Deduction, and Filing Information, or your income tax form instructions.
How you report any taxable scholarship or fellowship grant income depends on which return you file.
If you file Form 1040 or 1040-SR, include any taxable amount reported to you in box 1 of Form W-2 in the total on line 1a. Include any taxable amount not reported to you in box 1 of Form W-2 on Schedule 1 (Form 1040), line 8r.
If you file Form 1040-NR, report any taxable amount on Schedule 1 (Form 1040), line 8r. Generally, you must report the amount reported to you in box 2 of Form(s) 1042-S, Foreign Person's U.S. Source Income Subject to Withholding. For more information, see the Instructions for Form 1040-NR.
Other Types of Educational Assistance
The following discussions deal with other common types of educational assistance.
A Fulbright grant is generally treated as a scholarship or fellowship grant in figuring how much of the grant is tax free.
These need-based grants are treated as scholarships for purposes of determining their tax treatment. They are tax free to the extent used for qualified education expenses during the period for which a grant is awarded.
An appointment to a U.S. military academy isn't a scholarship or fellowship grant. Payment you receive as a cadet or midshipman at an armed services academy is pay for personal services and will be reported to you in box 1 of Form W-2. Include this pay in your income in the year you receive it.
Payments you receive for education, training, or subsistence under any law administered by the Department of Veterans Affairs (VA) are tax free. Don't include these payments as income on your federal tax return.
If you qualify for one or more of the education tax benefits discussed in chapters 2 through 11, you may have to reduce the amount of education expenses qualifying for a specific tax benefit by part or all of your VA payments. This applies only to the part of your VA payments that is required to be used for education expenses.
You may want to visit the Veterans Administration website at www.gibill.va.gov for specific information about the various VA benefits for education.
You have returned to college and are receiving two education benefits under the latest GI Bill: (1) a $1,534 monthly basic housing allowance (BHA) that is directly deposited to your checking account, and (2) $3,840 paid directly to your college for tuition. Neither of these benefits is taxable and you don't report them on your tax return. You also want to claim an American opportunity credit on your return. Your total tuition charges are $5,000. To figure the amount of credit, you must first subtract the $3,840 from your qualified education expenses because this payment under the GI Bill was required to be used for education expenses. You don't subtract any amount of the BHA because it was paid to you and its use wasn't restricted.
Qualified Tuition Reduction
If you are allowed to study tuition free or for a reduced rate of tuition, you may not have to pay tax on this benefit. This is called a tuition reduction. You don't have to include a qualified tuition reduction in your income.
A tuition reduction is qualified only if you receive it from, and use it at, an eligible educational institution. You don't have to use the tuition reduction at the eligible educational institution from which you received it. In other words, if you work for an eligible educational institution and the institution arranges for you to take courses at another eligible educational institution without paying any tuition, you may not have to include the value of the free courses in your income.
The rules for determining if a tuition reduction is qualified, and therefore tax free, are different if the education provided is below the graduate level or is graduate education.
You must include in your income any tuition reduction you receive that is payment for your services.
An eligible educational institution is one that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it regularly carries on its educational activities.
Qualified tuition reductions apply to officers, owners, or highly compensated employees only if benefits are available to employees on a nondiscriminatory basis. This means that the tuition reduction benefits must be available on substantially the same basis to each member of a group of employees. The group must be defined under a reasonable classification set up by the employer. The classification must not discriminate in favor of owners, officers, or highly compensated employees.
Generally, you must include in income the part of any qualified tuition reduction that represents payment for teaching, research, or other services by the student required as a condition of receiving the qualified tuition reduction. This applies even if all candidates for a degree must perform the services to receive the degree. However, see Exceptions next.
You don't have to include in income the part of any scholarship or fellowship grant that represents payment for teaching, research, or other services if you receive the amount under:
Education Below the Graduate Level
If you receive a tuition reduction for education below the graduate level (including primary and secondary school), it is a qualified tuition reduction, and therefore tax free, only if your relationship to the educational institution providing the benefit is described below.
You are an employee of the eligible educational institution.
You were an employee of the eligible educational institution, but you retired or left on disability.
You are the surviving spouse of an individual who died while an employee of the eligible educational institution or who retired or left on disability.
You are the dependent child or spouse of an individual described in (1) through (3) above.
For purposes of the qualified tuition reduction, a child is a dependent child if the child is under age 25 and both parents have died.
For purposes of the qualified tuition reduction, a dependent child of divorced parents is treated as the dependent of both parents.
A tuition reduction you receive for graduate education is qualified, and therefore tax free, if both of the following requirements are met.
It is provided by an eligible educational institution.
You are a graduate student who performs teaching or research activities for the educational institution.
Any tuition reduction that is taxable should be included as wages in box 1 of your Form W-2. Report the amount from box 1 of Form W-2 on Form 1040 or 1040-SR, line 1a.
2. American Opportunity Credit
Educational institution's EIN required. To claim the American opportunity credit, you must provide the educational institution's employer identification number (EIN) on your Form 8863. You should be able to obtain this information from Form 1098-T or the educational institution.
Form 8862 may be required. If your American opportunity credit was denied or reduced for any reason other than a math or clerical error for any tax year beginning after 2015, you must attach a completed Form 8862, Information To Claim Certain Credits After Disallowance, to your tax return for the next year for which you claim the credit. See Form 8862 and its instructions for details.
Form 1098-T requirement. To be eligible to claim the American opportunity credit, the law requires a taxpayer (or a dependent) to have received Form 1098-T, Tuition Statement, from an eligible educational institution, whether domestic or foreign. However, you may claim the credit if the student doesn't receive a Form 1098-T because the student's educational institution isn't required to furnish a Form 1098-T to the student under existing rules (for example, if the student is a qualified nonresident alien, has qualified education expenses paid entirely with scholarships, has qualified education expenses paid under a formal billing arrangement, or is enrolled in courses for which no academic credit is awarded). If a student's educational institution isn't required to provide a Form 1098-T to the student, you may claim the credit without a Form 1098-T if you otherwise qualify, can demonstrate that you (or a dependent) were enrolled at an eligible educational institution, and can substantiate the payment of qualified tuition and related expenses.You may also claim a credit if the student attended an eligible educational institution required to furnish Form 1098-T but the student doesn't receive Form 1098-T before you file your tax return (for example, if the institution is otherwise required to furnish the Form 1098-T and doesn't furnish it or refuses to do so) and you take the following required steps: After January 31, 2023, but before you file your 2022 tax return, you or the student must request that the educational institution furnish a Form 1098-T. You must fully cooperate with the educational institution's efforts to gather the information needed to furnish the Form 1098-T. You must also otherwise qualify for the benefit, be able to demonstrate that you (or a dependent) were enrolled at an eligible educational institution, and substantiate the payment of qualified tuition and related expenses.
Ban on claiming the American opportunity credit. If you claim the American opportunity credit even though you're not eligible, you may be banned from claiming the credit for 2 or 10 years depending on your conduct. See Caution under Introduction below.
Taxpayer identification number (TIN) needed by due date of return. If you haven't been issued a TIN by the due date of your 2022 return (including extensions), you can't claim the American opportunity credit on either your original or an amended 2022 return. Also, the American opportunity credit isn't allowed on either your original or an amended 2022 return for a student who hasn't been issued a TIN by the due date of your return (including extensions).
For 2022, there are two tax credits available to help you offset the costs of higher education by reducing the amount of your income tax. They are the American opportunity credit (this chapter) and the lifetime learning credit ( chapter 3 ).
This chapter explains:
Who can claim the American opportunity credit,
What expenses qualify for the credit,
Who is an eligible student,
Who can claim a dependent's expenses,
How to figure the credit,
How to claim the credit, and
When the credit must be repaid.
For 2022, you may be able to claim a credit of up to $2,500 for adjusted qualified education expenses paid for each student who qualifies for the American opportunity credit.
A tax credit reduces the amount of income tax you may have to pay. Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself. Forty percent of the American opportunity credit may be refundable. This means that if the refundable portion of your credit is more than your tax, the excess will be refunded to you.
Your allowable American opportunity credit may be limited by the amount of your income. Also, the nonrefundable part of the credit may be limited by the amount of your tax.
See Table 2-1 for the basics of this credit. The details are discussed in this chapter.
For each student, you can elect for any year only one of the credits. For example, if you elect to claim the American opportunity credit for a dependent on your 2022 tax return, you can't use that same dependent's qualified education expenses to figure the lifetime learning credit for 2022.
If you pay qualified education expenses for more than one student in the same year, you can choose to claim the American opportunity credit on a per-student, per-year basis. If you pay qualified education expenses for a student (or students) for whom you don't claim the American opportunity credit, you can use the adjusted qualified education expenses of that student (or those students) in figuring your lifetime learning credit. This means that, for example, you can claim the American opportunity credit for one student and the lifetime learning credit for another student in the same year.
There are several differences between these two credits. For example, you can claim the American opportunity credit based on the same student's expenses for no more than 4 tax years. However, there is no limit on the number of years for which you can claim a lifetime learning credit based on the same student's expenses. The differences between these credits are shown in the Appendix near the end of this publication.
If your American opportunity credit was denied or reduced for any reason other than a math or clerical error for any tax year beginning after 2015, you must attach a completed Form 8862 to your tax return for the next tax year for which you claim the credit. See Form 8862 and its instructions for details.
Table 2-1. Overview of the American Opportunity Credit for 2022
Can You Claim the Credit?
The following rules will help you determine if you are eligible to claim the American opportunity credit on your tax return.
Generally, you can claim the American opportunity credit if all three of the following requirements are met.
You pay qualified education expenses of higher education.
You pay the education expenses for an eligible student.
The eligible student is either yourself, your spouse, or a dependent you claim on your tax return.
Qualified education expenses paid by a dependent you claim on your tax return, or by a third party for that dependent, are considered paid by you.
Generally, you can claim the American opportunity credit for a student only if all of the following four requirements are met.
As of the beginning of 2022, the student had not completed the first 4 years of postsecondary education (generally, the freshman through senior years of college), as determined by the eligible educational institution. For this purpose, don't include academic credit awarded solely because of the student's performance on proficiency examinations.
The American opportunity credit has not been claimed by you or anyone else (see below) for this student for any 4 tax years before 2022. If the American opportunity credit has been claimed for this student for any 3 or fewer tax years before 2022, this requirement is met.
For at least one academic period beginning (or treated as beginning) in 2022, the student both:
Was enrolled in a program that leads to a degree, certificate, or other recognized educational credential; and
Carried at least one-half the normal full-time workload for his or her course of study.
The standard for what is half of the normal full-time workload is determined by each eligible educational institution. However, the standard may not be lower than any of those established by the U.S. Department of Education under the Higher Education Act of 1965.
For 2022, treat an academic period beginning in the first 3 months of 2023 as if it began in 2022 if qualified education expenses for the student were paid in 2022 for that academic period. See Prepaid expenses , later.
As of the end of 2022, the student had not been convicted of a federal or state felony for possessing or distributing a controlled substance.
Sharon was eligible for the American opportunity credit for 2016, 2017, 2019, and 2021. Sharon’s parents claimed the American opportunity credit for Sharon on their 2016, 2017, and 2019 tax returns. Sharon claimed the American opportunity credit on her 2021 tax return. The American opportunity credit has been claimed for Sharon for 4 tax years before 2022. Therefore, the American opportunity credit can't be claimed for Sharon for 2022. If Sharon were to file Form 8863 for 2022, the box on Part III, line 23, should be checked “Yes” and only the lifetime learning credit would be able to be claimed.
Wilbert was eligible for the American opportunity credit for 2018, 2019, 2020, and 2022. Wilbert’s parents claimed the American opportunity credit for Wilbert on their tax returns for 2018, 2019, and 2020. No one claimed an American opportunity credit for Wilbert for any other tax year. The American opportunity credit has been claimed for Wilbert for only 3 tax years before 2022. Therefore, Wilbert meets the second requirement to be eligible for the American opportunity credit. If Wilbert were to file Form 8863 for 2022, the box on Part III, line 23, should be checked “No.” If Wilbert meets all of the other requirements, he is eligible for the American opportunity credit.
Glenda enrolls on a full-time basis in a degree program for the 2023 spring semester, which begins in January 2023. Glenda pays the tuition for the 2023 spring semester in December 2022. Because the tuition Glenda paid in 2022 relates to an academic period that begins in the first 3 months of 2023, the eligibility to claim an American opportunity credit in 2022 is determined as if the 2023 spring semester began in 2022. Therefore, Glenda satisfies this third requirement.
“Qualified education expenses” are defined later under Qualified Education Expenses . “Eligible students” are defined later under Who Is an Eligible Student . A dependent you claim on your tax return is defined later under Who Can Claim a Dependent's Expenses .
You may find Figure 2-1 helpful in determining if you can claim an American opportunity credit on your tax return.
Figure 2-1. Can You Claim the American Opportunity Credit for 2022?
Figure 2-1 Can you claim the American opportunity credit for 2022?
Summary: This flowchart is used to determine if you qualify to claim the American opportunity Credit for 2022.
This is the start of the flowchart.
Decision (1)
Did you pay qualified education expenses in 2022 for an eligible student?*
Decision (2)
Did the academic period for which you paid qualified education expenses begin in 2022 or the first 3 months of 2023?
Decision (3)
Is the eligible student you, your spouse (if married filing jointly), or your dependent you claim on your tax return?
Decision (4)
Are you listed as a dependent on another person's tax return?
Decision (5)
Is your filing status married filing separately?
Decision (6)
For any part of 2022, were you (or your spouse) a nonresident alien who did not elect to be treated as a resident alien for tax purposes?
Decision (7)
Is your modified adjusted gross income (MAGI) less than $90,000 ($180,000 if married filing jointly)?
Decision (8)
Did you use the same expenses to claim a deduction or credit?
Decision (9)
Were the same expenses paid entirely with a tax-free scholarship, grant, or employer-provided educational assistance?
Decision (10)
Did you or someone else receive a refund of all the expenses?
Process (a)
You can't claim the American opportunity credit for 2022
Process (b)
You can claim the American opportunity credit for 2022.
This is the end of the flowchart.
Please click here for the text description of the image.
You can't claim the American opportunity credit for 2022 if any of the following apply.
Your filing status is married filing separately.
You are claimed as a dependent on another person's tax return, such as your parent's return. See Who Can Claim a Dependent's Expenses , later.
Your modified adjusted gross income (MAGI) is $90,000 or more ($180,000 or more if married filing jointly). MAGI is explained later under Effect of the Amount of Your Income on the Amount of Your Credit .
You (or your spouse) were a nonresident alien for any part of 2022 and the nonresident alien didn't elect to be treated as a resident alien for tax purposes. More information on nonresident aliens can be found in Pub. 519, U.S. Tax Guide for Aliens.
You weren’t issued an SSN (or ITIN) by the due date of your 2022 return (including extensions). You can't claim the American opportunity credit on either your original or an amended 2022 return. Also, you can't claim this credit on your original or an amended 2022 return for a student who wasn’t issued an SSN, ATIN, or ITIN by the due date of your return (including extensions). If an ATIN or ITIN is applied for on or before the due date of a 2022 return (including extensions) and the IRS issues an ATIN or ITIN as a result of the application, the IRS will consider the ATIN or ITIN as issued on or before the due date of the return.
What Expenses Qualify?
The American opportunity credit is based on adjusted qualified education expenses you pay for yourself, your spouse, or a dependent you claim on your tax return. Generally, the credit is allowed for adjusted qualified education expenses paid in 2022 for an academic period beginning in 2022 or beginning in the first 3 months of 2023.
For example, if you paid $1,500 in December 2022 for qualified tuition for the spring 2023 semester beginning January 2023, you can use that $1,500 in figuring your 2022 credit.
An academic period includes a semester, trimester, quarter, or other period of study (such as a summer school session) as reasonably determined by an educational institution. If an educational institution uses credit hours or clock hours and doesn't have academic terms, each payment period can be treated as an academic period.
You can claim an American opportunity credit for qualified education expenses paid with the proceeds of a loan. Use the expenses to figure the American opportunity credit for the year in which the expenses are paid, not the year in which the loan is repaid. Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account.
You can claim an American opportunity credit for qualified education expenses not refunded when a student withdraws.
Qualified Education Expenses
For purposes of the American opportunity credit, qualified education expenses are tuition and certain related expenses required for enrollment or attendance at an eligible educational institution.
An eligible educational institution is generally any accredited public, nonprofit, or proprietary (privately owned profit-making) college, university, vocational school, or other postsecondary educational institution. Also, the institution must be eligible to participate in a student aid program administered by the U.S. Department of Education. Virtually all accredited postsecondary institutions meet this definition.
An eligible educational institution also includes certain educational institutions located outside the United States that are eligible to participate in a student aid program administered by the U.S. Department of Education.
Student activity fees are included in qualified education expenses only if the fees must be paid to the institution as a condition of enrollment or attendance.
However, expenses for books, supplies, and equipment needed for a course of study are included in qualified education expenses whether or not the materials are purchased from the educational institution.
Qualified education expenses paid in 2022 for an academic period that begins in the first 3 months of 2023 can be used in figuring an education credit for 2022 only. See Academic period , earlier. For example, if you pay $2,000 in December 2022 for qualified tuition for the 2023 winter quarter that begins in January 2023, you can use that $2,000 in figuring an education credit for 2022 only (if you meet all the other requirements).
In the following examples, assume that each student is an eligible student at an eligible educational institution.
Jefferson is a sophomore in University V's degree program in dentistry. This year, in addition to tuition, there is a requirement to pay a fee to the university for the rental of the dental equipment used in this program. Because the equipment rental is needed for this course of study, Jefferson's equipment rental fee is a qualified expense.
Grace and William, both first-year students at College W, are required to have certain books and other reading materials to use in their mandatory first-year classes. The college has no policy about how students should obtain these materials, but any student who purchases them from College W's bookstore will receive a bill directly from the college. William bought the books from a friend; Grace bought the books at College W's bookstore. Both are qualified education expenses for the American opportunity credit.
When Kelly enrolled at College X for the freshman year, the school required payment of a separate student activity fee in addition to the tuition. This activity fee is required of all students, and is used solely to fund on-campus organizations and activities run by students, such as the student newspaper and the student government. No portion of the fee covers personal expenses. Although labeled as a student activity fee, the fee is required for Kelly's enrollment and attendance at College X and is a qualified expense.
You can't do any of the following.
Deduct higher education expenses on your income tax return (as, for example, a business expense) and also claim an American opportunity credit based on those same expenses.
Claim an American opportunity credit for any student and use any of that student's expenses in figuring your lifetime learning credit.
Figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or qualified tuition program (QTP) using the same expenses you used to figure the American opportunity credit. See Coordination With American Opportunity and Lifetime Learning Credits in chapter 6 and Coordination With American Opportunity and Lifetime Learning Credits in chapter 7 .
Claim a credit based on qualified education expenses paid with tax-free educational assistance, such as a scholarship, grant, or assistance provided by an employer. See Adjustments to Qualified Education Expenses next.
For each student, reduce the qualified education expenses paid by or on behalf of that student under the following rules. The result is the amount of adjusted qualified education expenses for each student.
For tax-free educational assistance received in 2022, reduce the qualified educational expenses for each academic period by the amount of tax-free educational assistance allocable to that academic period. See Academic period , earlier.
Some tax-free educational assistance received after 2022 may be treated as a refund of qualified education expenses paid in 2022. This tax-free educational assistance is any tax-free educational assistance received by you or anyone else after 2022 for qualified education expenses paid on behalf of a student in 2022 (or attributable to enrollment at an eligible educational institution during 2022).
If this tax-free educational assistance is received after 2022 but before you file your 2022 income tax return, see Refunds received after 2022 but before your income tax return is filed , later. If this tax-free educational assistance is received after 2022 and after you file your 2022 income tax return, see Refunds received after 2022 and after your income tax return is filed , later.
Tax-free educational assistance includes:
The tax-free parts of scholarships and fellowship grants (see Tax-Free Scholarships and Fellowship Grants in chapter 1 );
The tax-free part of Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1 );
Employer-provided educational assistance (see chapter 10);
Veterans' educational assistance (see Veterans' Benefits in chapter 1 ); and
Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance.
Generally, any scholarship or fellowship grant is treated as tax free. However, a scholarship or fellowship grant isn't treated as tax free to the extent the student includes it in gross income (the student may or may not be required to file a tax return for the year the scholarship or fellowship grant is received) and either of the following is true.
The scholarship or fellowship grant (or any part of it) must be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1.
The scholarship or fellowship grant (or any part of it) may be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1.
A refund of qualified education expenses may reduce adjusted qualified education expenses for the tax year or require repayment (recapture) of a credit claimed in an earlier year. Some tax-free educational assistance received after 2022 may be treated as a refund. See Tax-free educational assistance , earlier.
For each student, figure the adjusted qualified education expenses for 2022 by adding all the qualified education expenses for 2022 and subtracting any refunds of those expenses received from the eligible educational institution during 2022.
If anyone receives a refund after 2022 of qualified education expenses paid on behalf of a student in 2022 and the refund is paid before you file an income tax return for 2022, the amount of qualified education expenses for 2022 is reduced by the amount of the refund.
If anyone receives a refund after 2022 of qualified education expenses paid on behalf of a student in 2022 and the refund is paid after you file an income tax return for 2022, you may need to repay some or all of the credit. See Credit recapture next.
If any tax-free educational assistance for the qualified education expenses paid in 2022, or any refund of your qualified education expenses paid in 2022, is received after you file your 2022 income tax return, you must recapture (repay) any excess credit. You do this by refiguring the amount of your adjusted qualified education expenses for 2022 by reducing the expenses by the amount of the refund or tax-free educational assistance. You then refigure your education credit(s) for 2022 and figure the amount by which your 2022 tax liability would have increased if you claimed the refigured credit(s). Include that amount as an additional tax for the year the refund or tax-free assistance was received.
You paid $7,000 tuition and fees in August 2022, and your child began college in September 2022. You filed your 2022 tax return on February 17, 2023, and claimed an American opportunity credit of $2,500. After you filed your return, you received a refund of $4,000. You must refigure your 2022 American opportunity credit using $3,000 of qualified education expenses instead of $7,000. The refigured credit is $2,250. The increase to your tax liability is $250. Include the difference of $250 as additional tax on your 2023 tax return. See the instructions for your 2023 income tax return to determine where to include this tax.
Don't reduce qualified education expenses by amounts paid with funds the student receives as:
Payment for services, such as wages;
An inheritance; or
A withdrawal from the student's personal savings.
Don't reduce the qualified education expenses by any scholarship or fellowship grant reported as income on the student's tax return in the following situations.
The use of the money is restricted, by the terms of the scholarship or fellowship grant, to costs of attendance (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1.
The use of the money isn't restricted.
Joan paid $3,000 for tuition and $5,000 for room and board at University X. The university did not require payment of any fees in addition to the tuition in order to enroll in or attend classes. To help pay these costs, Joan was awarded a $2,000 scholarship and a $4,000 student loan. The terms of the scholarship state that it can be used to pay any of Joan's college expenses.
University X applies the $2,000 scholarship against Joan's $8,000 total bill, and Joan pays the $6,000 balance of her bill from University X with a combination of the student loan and personal savings. Joan doesn't report any portion of the scholarship as income on the tax return.
In figuring the amount of either education credit (American opportunity or lifetime learning), Joan must reduce the qualified education expenses by the amount of the scholarship ($2,000) because the entire scholarship was excluded from the reported income on Joan’s tax return. The student loan isn't tax-free educational assistance, so the qualified expenses don't need to be reduced by any part of the loan proceeds. Joan is treated as having paid $1,000 in qualified education expenses ($3,000 tuition − $2,000 scholarship).
The facts are the same as in Example 1 , except that Joan reports the entire scholarship as income on the tax return. Because Joan reported the entire $2,000 scholarship as income, the qualified education expenses don't need to be reduced. Joan is treated as having paid $3,000 in qualified education expenses.
You may be able to increase your American opportunity credit when the student (you, your spouse, or your dependent) includes certain scholarships or fellowship grants in the student's gross income. Your credit may increase only if the amount of the student's qualified education expenses minus the total amount of scholarships and fellowship grants is less than $4,000. If this situation applies, consider including some or all of the scholarship or fellowship grant in the student's income in order to treat the included amount as paying nonqualified expenses instead of qualified education expenses. Nonqualified expenses are expenses such as room and board that aren't qualified education expenses such as tuition and related fees.
Scholarships and fellowship grants that the student includes in income don't reduce the student's qualified education expenses available to figure your American opportunity credit. Thus, including enough scholarship or fellowship grant in the student's income to report up to $4,000 in qualified education expenses for your American opportunity credit may increase the credit by enough to increase your tax refund or reduce the amount of tax you owe even considering any increased tax liability from the additional income. However, the increase in tax liability as well as the loss of other tax credits may be greater than the additional American opportunity credit and may cause your tax refund to decrease or the amount of tax you owe to increase. Your specific circumstances will determine what amount, if any, of scholarship or fellowship grant to include in income to maximize your tax refund or minimize the amount of tax you owe.
The scholarship or fellowship grant must be one that may qualify as a tax-free scholarship under the rules discussed in chapter 1. Also, the scholarship or fellowship grant must be one that may (by its terms) be used for nonqualified expenses. Finally, the amount of the scholarship or fellowship grant that is applied to nonqualified expenses can't exceed the amount of the student's actual nonqualified expenses that are paid in the tax year. This amount may differ from the student's living expenses estimated by the student's school in figuring the official cost of attendance under student aid rules.
The fact that the educational institution applies the scholarship or fellowship grant to qualified education expenses, such as tuition and related fees, doesn't prevent the student from choosing to apply certain scholarships or fellowship grants to the student’s actual nonqualified expenses. By making this choice (that is, by including the part of the scholarship or fellowship grant applied to the student’s nonqualified expenses in income), the student may increase taxable income and may be required to file a tax return. But this allows payments made in cash, by check, by credit or debit card, or with borrowed funds such as a student loan to be applied to qualified education expenses.
Example 1—No scholarship.
Bill, age 28 and unmarried, enrolled full-time in 2022 as a first-year student at a local college to earn a degree in law enforcement. This was Bill’s first year of postsecondary education. During 2022, Bill paid $5,600 for qualified education expenses and $4,400 for room and board for the fall 2022 semester. Bill and the college meet all the requirements for the American opportunity credit. Bill's adjusted gross income (AGI) and MAGI, for purposes of figuring his credit, are $36,450. Bill claims the standard deduction of $12,950, resulting in taxable income of $23,500 and an income tax liability before credits of $2,618. Bill claims no credits other than the American opportunity credit. Bill figures his American opportunity credit based on qualified education expenses of $4,000, which results in a credit of $2,500 and a tax liability after credits of $118 ($2,618 − $2,500).
Example 2—Scholarship excluded from income.
The facts are the same as in Example 1—No scholarship , except that Bill was awarded a $5,600 scholarship. Under the terms of the scholarship, it may be used to pay any educational expenses, including room and board. If Bill excludes the scholarship from income, it will be deemed (for purposes of figuring the education credit) to have been applied to pay tuition, required fees, and course materials. Bill’s adjusted qualified education expenses would be zero and there would be no education credit. Therefore, Bill's tax liability after credits would be $2,618.
Example 3—Scholarship partially included in income.
The facts are the same as in Example 2—Scholarship excluded from income . If, unlike Example 2 , Bill includes $4,000 of the scholarship in income, the $4,000 will be deemed to have been applied to pay for room and board. The remaining $1,600 of the $5,600 scholarship would reduce the qualified education expenses, and the adjusted qualified education expenses would be $4,000. Bill's AGI and MAGI would increase to $40,450, the taxable income would increase to $27,500, and the tax liability before credits would increase to $3,098. Based on the adjusted qualified education expenses of $4,000, Bill would be able to claim an American opportunity credit of $2,500 and the tax liability after credits would be $598 ($3,098 − $2,500).
Example 4—Scholarship applied by the postsecondary school to tuition.
The facts are the same as in Example 3—Scholarship partially included in income , except the $5,600 scholarship is paid directly to the local college. The fact that the local college applies the scholarship to Bill's tuition and related fees doesn't prevent Bill from including $4,000 of the scholarship in income. As in Example 3 , by doing so, Bill will be deemed to have applied $4,000 to pay for room and board. Bill would be able to claim the American opportunity credit of $2,500 and the tax liability after credits would be $598.
Example 5—Student with a dependent child.
Jane, age 28 and unmarried, enrolled full-time as a first-year student at a local technical college to get a certificate as a computer technician. This was Jane’s first year of postsecondary education. During 2022, Jane paid $6,000 for qualified education expenses. Jane and the college meet all the requirements for the American opportunity credit. Jane has a dependent child, age 10, who is a qualifying child for purposes of receiving the earned income credit (EIC) and the child tax credit. Jane's wages are $20,000. Jane withheld no income taxes on these wages and has no other income or adjustments. Jane was awarded a $5,500 scholarship. Under the terms of the scholarship, it may be used to pay tuition and any living expense, including rent. Jane paid $10,000 in living expenses in 2022.
If Jane excludes the entire scholarship from income , Jane will be deemed to have applied the entire scholarship to pay qualified education expenses. The AGI and MAGI would be $20,000. The tax liability before any credits would be $61. The qualified education expenses would be reduced to $500. Jane would be able to receive a $261 American opportunity credit ($200 refundable and $61 nonrefundable), a $1,500 additional child tax credit, and a $3,733 EIC. In total, Jane would be able to receive a tax refund of $5,433.
If Jane includes the entire scholarship in income , Jane will be deemed to have applied the entire scholarship to pay living expenses. The qualified education expenses would be $6,000, and the AGI and MAGI would be $25,500. The tax liability before any credits would be $613. Jane would be able to receive a $1,613 American opportunity credit ($1,000 refundable and $613 nonrefundable), a $1,500 additional child tax credit, and a $2,871 EIC. In total, Jane would be able to receive a tax refund of $5,371.
If Jane includes $3,500 of the scholarship in income , Jane will be deemed to have applied $3,500 of the scholarship to pay living expenses, and $2,000 to pay qualified education expenses. The qualified education expenses would be $4,000, and the AGI and MAGI would be $23,500. The tax liability before any credits would be $413. Jane would be able to receive a $1,413 American opportunity credit ($1,000 refundable and $413 nonrefundable), a $1,500 additional child tax credit, and a $3,191 EIC. In total, Jane would be able to receive a tax refund of $5,691.
If Jane includes $1,500 of the scholarship in income , Jane will be deemed to have applied $1,500 of the scholarship to pay living expenses, and $4,000 to pay qualified education expenses. The qualified education expenses would be $2,000, and the AGI and MAGI would be $21,500. The tax liability before any credits would be $211. Jane would be able to receive a $1,011 American opportunity credit ($800 refundable and $211 nonrefundable), a $1,500 additional child tax credit, and a $3,510 EIC. In total, Jane would be able to receive a tax refund of $5,810. This is the highest tax refund among these scenarios.
Whether you will benefit from applying a scholarship or fellowship grant to nonqualified expenses will depend on the amount of the student's qualified education expenses, the amount of the scholarship or fellowship grant, and whether the scholarship or fellowship grant may (by its terms) be used for nonqualified expenses. Any benefit will also depend on the student’s federal and state marginal tax rates as well as any federal and state tax credits the student claims. Before deciding, look at the total amount of your federal and state tax refunds or taxes owed and, if the student is your dependent, the student’s tax refunds or taxes owed. For example, if you are the student and you also claim the EIC, choosing to apply a scholarship or fellowship grant to nonqualified expenses by including the amount in your income may benefit you if the increase to your American opportunity credit is more than the decrease to your EIC.
Expenses That Don't Qualify
Qualified education expenses don't include amounts paid for:
Medical expenses (including student health fees);
Room and board;
Transportation; or
Similar personal, living, or family expenses.
Qualified education expenses generally don't include expenses that relate to any course of instruction or other education that involves sports, games, or hobbies, or any noncredit course. However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify.
Some eligible educational institutions combine all of their fees for an academic period into one amount. If you don't receive or don't have access to an allocation showing how much you paid for qualified education expenses and how much you paid for personal expenses, such as those listed earlier, contact the institution. The institution is generally required to make this allocation and provide you with the amount you paid for qualified education expenses on Form 1098-T. See Figuring the Credit , later, for more information about Form 1098-T.
To claim the American opportunity credit, the student for whom you pay qualified education expenses must be an eligible student. This is a student who meets all of the following requirements.
The student didn't have expenses that were used to figure an American opportunity credit in any 4 earlier tax years.
The student hadn't completed the first 4 years of postsecondary education (generally, the freshman, sophomore, junior, and senior years of college) before 2022.
For at least one academic period beginning in 2022 (or the first 3 months of 2023 if the qualified expenses were paid in 2022), the student was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential.
The student hasn't been convicted of any federal or state felony for possessing or distributing a controlled substance as of the end of 2022.
A student has completed the first 4 years of postsecondary education if the institution at which the student is enrolled awards the student 4 years of academic credit at that institution for coursework completed by the student before 2022. This student generally wouldn't be an eligible student for purposes of the American opportunity credit.
Any academic credit awarded solely on the basis of the student's performance on proficiency examinations is disregarded in determining whether the student has completed 4 years of postsecondary education.
A student was enrolled at least half-time if the student was taking at least half the normal full-time workload for his or her course of study.
Figure 2-2. Who Is an Eligible Student for the American Opportunity Credit?
Note under title: This chart is provided to help you quickly decide whether a student is eligible for the American opportunity credit. See the text for more details.
Did the student complete the first 4 years of postsecondary education before the beginning of the tax year?
Was the American opportunity credit claimed in at least 4 prior tax years for this student?
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 2022 (or the first 3 months of 2023 if the qualified expenses were paid in 2022)?
Is the student free of any federal or state felony conviction for possessing or distributing a controlled substance as of the end of the tax year?
The student isn't an eligible student.
The student is an eligible student.
Mack graduated from high school in June 2021. In September, Mack enrolled in an undergraduate degree program at College U, and attended full-time for both the 2021 fall and 2022 spring semesters. For the 2022 fall semester, Mack was enrolled less than half-time. Because Mack was enrolled in an undergraduate degree program on at least a half-time basis for at least one academic period that began in 2021 and at least one academic period that began in 2022, Mack is an eligible student for tax years 2021 and 2022 (including the 2022 fall semester when Mack enrolled at College U on less than a half-time basis).
After taking classes at College V on a part-time basis for a few years, Shelly became a full-time student for the 2022 spring semester. College V classified Shelly as a second-semester senior (fourth year) for the 2022 spring semester and as a first-semester graduate student (fifth year) for the 2022 fall semester. Because College V didn't classify Shelly as having completed the first 4 years of postsecondary education as of the beginning of 2022, Shelly is an eligible student for tax year 2022. Therefore, the qualified education expenses paid for the 2022 spring semester and the 2022 fall semester are taken into account in figuring the American opportunity credit for 2022.
During the 2021 fall semester, Larry was a high school student who took classes on a half-time basis at College X. Larry wasn't enrolled as part of a degree program at College X because College X only admits students to a degree program if they have a high school diploma or equivalent. Because Larry wasn't enrolled in a degree program at College X during 2021, Larry wasn't an eligible student for tax year 2021.
The facts are the same as in Example 3 . During the 2022 spring semester, Larry again attended College X but not as part of a degree program. Larry graduated from high school in June 2022. For the 2022 fall semester, Larry enrolled as a full-time student in College X as part of a degree program, and College X awarded Larry credit for the prior coursework at College X. Because Larry was enrolled in a degree program at College X for the 2022 fall term on at least a half-time basis, Larry is an eligible student for all of tax year 2022. Therefore, the qualified education expenses paid for classes taken at College X during both the 2022 spring semester (during which Larry wasn't enrolled in a degree program) and the 2022 fall semester are taken into account in figuring any American opportunity credit.
Dee graduated from high school in June 2021. In January 2022, Dee enrolled in a 1-year postsecondary certificate program on a full-time basis to obtain a certificate as a travel agent. Dee completed the program in December 2022 and was awarded a certificate. In January 2023, Dee enrolled in a 1-year postsecondary certificate program on a full-time basis to obtain a certificate as a computer programmer. Dee is an eligible student for both tax years 2022 and 2023 because the degree requirement, the workload requirement, and the year of study requirement for those years have been met.
Who Can Claim a Dependent's Expenses?
If there are qualified education expenses for your dependent during a tax year, either you or your dependent, but not both of you, can claim an American opportunity credit for your dependent's expenses for that year.
For you to claim an American opportunity credit for your dependent's expenses, you must also claim your dependent on your tax return. You do this by listing your dependent's name and other required information on Form 1040 or 1040-SR.
If you claim on your tax return an eligible student who is your dependent, treat any expenses paid (or deemed paid) by your dependent as if you had paid them. Include these expenses when figuring the amount of your American opportunity credit.
If you claim a dependent who is an eligible student, only you can include any expenses you paid when figuring the amount of the American opportunity credit. If neither you nor anyone else claims the dependent, only the dependent can include any expenses you paid when figuring the American opportunity credit.
Someone other than you, your spouse, or your dependent (such as a relative or former spouse) may make a payment directly to an eligible educational institution to pay for an eligible student's qualified education expenses. In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. If you claim the student as a dependent on your tax return, you are considered to have paid the expenses.
In 2022, Todd’s grandparent makes a payment directly to an eligible educational institution for Todd's qualified education expenses. For purposes of claiming an American opportunity credit, Todd is treated as receiving the money from the grandparent and, in turn, paying the qualified education expenses himself.
Unless Todd is claimed as a dependent on someone else's 2022 tax return, only Todd can use the payment to claim an American opportunity credit.
If anyone, such as Todd's parents, claims Todd on their 2022 tax return, whoever claims Todd may be able to use the expenses to claim an American opportunity credit. If anyone else claims Todd, Todd can't claim an American opportunity credit.
When an eligible educational institution provides a reduction in tuition to an employee of the institution (or spouse or dependent child of an employee), the amount of the reduction may or may not be taxable. If it is taxable, the employee is treated as receiving a payment of that amount and, in turn, paying it to the educational institution on behalf of the student. For more information on tuition reductions, see Qualified Tuition Reduction in chapter 1.
Figuring the Credit
The amount of the American opportunity credit (per eligible student) is the sum of:
100% of the first $2,000 of qualified education expenses you paid for the eligible student, and
25% of the next $2,000 of qualified education expenses you paid for that student.
The maximum amount of American opportunity credit you can claim in 2022 is $2,500 multiplied by the number of eligible students. You can claim the full $2,500 for each eligible student for whom you paid at least $4,000 of adjusted qualified education expenses. However, the credit may be reduced based on your MAGI. See Effect of the Amount of Your Income on the Amount of Your Credit , later.
Jack and Kay are married and file a joint tax return. For 2022, they claim their dependent child on their tax return. Their MAGI is $70,000. Their child is in the junior (third) year of studies at the local university. Jack and Kay paid qualified education expenses of $4,300 in 2022.
Jack and Kay, their child, and the local university meet all of the requirements for the American opportunity credit. Jack and Kay can claim a $2,500 American opportunity credit in 2022. This is 100% of the first $2,000 of qualified education expenses, plus 25% of the next $2,000.
To help you figure your American opportunity credit, the student may receive Form 1098-T. Generally, an eligible educational institution (such as a college or university) must send Form 1098-T (or acceptable substitute) to each enrolled student by January 31, 2023. An institution will report payments received (box 1) for qualified education expenses. However, the amount on Form 1098-T might be different from what you paid. When figuring the credit, use only the amounts you paid or are deemed to have paid in 2022 for qualified education expenses.
In addition, Form 1098-T should give other information for that institution, such as adjustments made for prior years, the amount of scholarships or grants, reimbursements or refunds, and whether the student was enrolled at least half-time or was a graduate student.
The eligible educational institution may ask for a completed Form W-9S, Request for Student's or Borrower's Taxpayer Identification Number and Certification, or similar statement to obtain the student's name, address, and TIN.
Effect of the Amount of Your Income on the Amount of Your Credit
The amount of your American opportunity credit is phased out (gradually reduced) if your MAGI is between $80,000 and $90,000 ($160,000 and $180,000 if you file a joint return). You can't claim an American opportunity credit if your MAGI is $90,000 or more ($180,000 or more if you file a joint return).
For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return.
If you file Form 1040 or 1040-SR, your MAGI is the AGI on line 11 of that form, modified by adding back any:
Foreign earned income exclusion,
Foreign housing exclusion,
Foreign housing deduction,
Exclusion of income by bona fide residents of American Samoa, and
Exclusion of income by bona fide residents of Puerto Rico.
Worksheet 2-1. MAGI for the American Opportunity Credit
If your MAGI is within the range of incomes where the credit must be reduced, you will figure your reduced credit using lines 2–7 of Form 8863, Part I. The same method is shown in the following example.
You are filing a joint return and your MAGI is $165,000. In 2022, you paid $5,000 of qualified education expenses.
You figure a tentative American opportunity credit of $2,500 (100% of the first $2,000 of qualified education expenses, plus 25% of the next $2,000 of qualified education expenses).
Because your MAGI is within the range of incomes where the credit must be reduced, you must multiply your tentative credit ($2,500) by a fraction. The numerator (top part) of the fraction is $180,000 (the upper limit for those filing a joint return) minus your MAGI. The denominator (bottom part) is $20,000, the range of incomes for the phaseout ($160,000 to $180,000). The result is the amount of your phased out (reduced) American opportunity credit ($1,875).
Refundable Part of Credit
Forty percent of the American opportunity credit is refundable for most taxpayers. However, if you were under age 24 at the end of 2022 and the conditions listed below apply to you, you can't claim any part of the American opportunity credit as a refundable credit on your tax return. Instead, your allowed credit (figured on Form 8863, Part II) will be used to reduce your tax as a nonrefundable credit only.
You don't qualify for a refund if items 1 (a, b, or c), 2, and 3 below apply to you.
Under age 18 at the end of 2022, or
Age 18 at the end of 2022 and your earned income (defined below) was less than one-half of your support (defined below), or
Over age 18 and under age 24 at the end of 2022 and a full-time student (defined below) and your earned income (defined below) was less than one-half of your support (defined below).
At least one of your parents was alive at the end of 2022.
You are filing a return as single, head of household, qualifying surviving spouse, or married filing separately for 2022.
Earned income includes wages, salaries, professional fees, and other payments received for personal services actually performed. Earned income includes the part of any scholarship or fellowship grant that represents payment for teaching, research, or other services performed by the student that are required as a condition for receiving the scholarship or fellowship grant. Earned income doesn't include that part of the compensation for personal services rendered to a corporation which represents a distribution of earnings or profits rather than a reasonable allowance as compensation for the personal services actually rendered.
If you are a sole proprietor or a partner in a trade or business in which both personal services and capital are material income-producing factors, earned income also includes a reasonable allowance for compensation for personal services, but not more than 30% of your share of the net profits from that trade or business (after subtracting the deduction for one-half of self-employment tax). However, if capital isn't an income-producing factor and your personal services produced the business income, the 30% limit doesn't apply.
Your support includes food, shelter, clothing, medical and dental care, education, and the like. Generally, the amount of the item of support will be the amount of expenses incurred by the one furnishing such item. If the item of support is in the form of property or lodging, measure the amount of such item of support by its fair market value. However, a scholarship received by you isn't considered support if you are a full-time student. See Pub. 501 for details.
You are a full-time student for 2022 if during any part of any 5 calendar months during the year you were enrolled as a full-time student at an eligible educational institution (defined earlier), or took a full-time, on-farm training course given by such an institution or by a state, county, or local government agency.
You claim the American opportunity credit by completing Form 8863 and submitting it with your Form 1040 or 1040-SR. Enter the nonrefundable part of the credit on Schedule 3 (Form 1040), line 3. Enter the refundable part of the credit on Form 1040 or 1040-SR, line 29.
3. Lifetime Learning Credit
Modified adjusted gross income (MAGI) limits. For 2022, the amount of your lifetime learning credit is gradually reduced (phased out) if your MAGI is between $80,000 and $90,000 ($160,000 and $180,000 if you file a joint return). You can't claim the credit if your MAGI is $90,000 or more ($180,000 or more if you file a joint return). For more information, see Figuring the Credit .
Form 1098-T requirement. To be eligible to claim the lifetime learning credit, the law requires a taxpayer (or a dependent) to have received Form 1098-T, Tuition Statement, from an eligible educational institution, whether domestic or foreign.However, you may claim the credit if the student doesn't receive a Form 1098-T because the student's educational institution isn't required to furnish a Form 1098-T to the student under existing rules (for example, if the student is a qualified nonresident alien, has qualified education expenses paid entirely with scholarships, has qualified education expenses paid under a formal billing arrangement, or is enrolled in courses for which no academic credit is awarded). If a student's educational institution isn't required to provide a Form 1098-T to the student, you may claim the credit without a Form 1098-T if you otherwise qualify, can demonstrate that you (or a dependent) were enrolled at an eligible educational institution, and can substantiate the payment of qualified tuition and related expenses.You may also claim the credit if the student attended an eligible educational institution required to furnish Form 1098-T but the student doesn't receive Form 1098-T before you file your tax return (for example, if the institution is otherwise required to furnish the Form 1098-T and doesn't furnish it or refuses to do so) and you take the following required steps: After January 31, 2023, but before you file your 2022 tax return, you or the student must request that the educational institution furnish a Form 1098-T. You must fully cooperate with the educational institution's efforts to gather the information needed to furnish the Form 1098-T. You must also otherwise qualify for the benefit, be able to demonstrate that you (or a dependent) were enrolled at an eligible educational institution, and substantiate the payment of qualified tuition and related expenses.
For 2022, there are two tax credits available to help you offset the costs of higher education by reducing the amount of your income tax. They are the American opportunity credit and the lifetime learning credit. This chapter discusses the lifetime learning credit. The American opportunity credit is discussed in chapter 2 .
Who can claim the lifetime learning credit,
For the tax year, you may be able to claim a lifetime learning credit of up to $2,000 for qualified education expenses paid for all eligible students. There is no limit on the number of years the lifetime learning credit can be claimed for each student.
A tax credit reduces the amount of income tax you may have to pay. Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself. The lifetime learning credit is a nonrefundable credit. This means that it can reduce your tax to zero, but if the credit is more than your tax, the excess won't be refunded to you.
Your allowable lifetime learning credit may be limited by the amount of your income and the amount of your tax.
For each student, you can elect for any year only one of the credits. For example, if you elect to claim the lifetime learning credit for a child on your 2022 tax return, you can't, for that same child, also claim the American opportunity credit for 2022.
If you are eligible to claim the lifetime learning credit and you are also eligible to claim the American opportunity credit for the same student in the same year, you can choose to claim either credit, but not both.
If you pay qualified education expenses for more than one student in the same year, you can choose to claim certain credits on a per-student, per-year basis. This means that, for example, you can claim the American opportunity credit for one student and the lifetime learning credit for another student in the same year.
There are several differences between these two credits. For example, you can claim the American opportunity credit for the same student for no more than 4 tax years. However, there is no limit on the number of years for which you can claim a lifetime learning credit based on the same student's expenses. The differences between these credits are shown in the Appendix near the end of this publication.
See Table 3-1 for the basics of the credit. The details are discussed in this chapter.
The following rules will help you determine if you are eligible to claim the lifetime learning credit on your tax return.
Generally, you can claim the lifetime learning credit if all three of the following requirements are met.
Table 3-1. Overview of the Lifetime Learning Credit for 2022
You may find Figure 3-1 helpful in determining if you can claim a lifetime learning credit on your tax return.
You can't claim the lifetime learning credit for 2022 if any of the following apply.
You are listed as a dependent on another person's tax return (such as your parents'). See Who Can Claim a Dependent's Expenses , later.
Your modified adjusted gross income (MAGI) is $90,000 or more ($180,000 or more if filing married filing jointly). MAGI is explained later under Effect of the Amount of Your Income on the Amount of Your Credit .
You (or your spouse) were a nonresident alien for any part of 2022 and the nonresident alien didn't elect to be treated as a resident alien for tax purposes. More information on nonresident aliens can be found in Pub. 519.
You claim the American opportunity credit (see chapter 2) for the same student in 2022.
The lifetime learning credit is based on qualified education expenses you pay for yourself, your spouse, or a dependent you claim on your tax return. Generally, the credit is allowed for qualified education expenses paid in 2022 for an academic period beginning in 2022 or in the first 3 months of 2023.
For example, if you paid $1,500 in December 2022 for qualified tuition for the spring 2023 semester beginning in January 2023, you may be able to use that $1,500 in figuring your 2022 credit.
You can claim a lifetime learning credit for qualified education expenses paid with the proceeds of a loan. You use the expenses to figure the lifetime learning credit for the year in which the expenses are paid, not the year in which the loan is repaid. Treat loan disbursements sent directly to the educational institution as paid on the date the institution credits the student's account.
You can claim a lifetime learning credit for qualified education expenses not refunded when a student withdraws.
For purposes of the lifetime learning credit, qualified education expenses are tuition and certain related expenses required for enrollment in a course at an eligible educational institution. The course must be either part of a postsecondary degree program or taken by the student to acquire or improve job skills.
An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education. It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions.
Certain educational institutions located outside the United States also participate in the U.S. Department of Education's Federal Student Aid (FSA) programs.
Student activity fees and expenses for course-related books, supplies, and equipment are included in qualified education expenses only if the fees and expenses must be paid to the institution for enrollment or attendance.
Jackson is a sophomore in University V's degree program in dentistry. This year, in addition to tuition, Jackson is required to pay a fee to the university for the rental of the dental equipment that will be used in this program. Because the equipment rental fee must be paid to University V for enrollment and attendance, the equipment rental fee is a qualified expense.
Donna and Charles, both first-year students at College W, are required to have certain books and other reading materials to use in their mandatory first-year classes. The college has no policy about how students should obtain these materials, but any student who purchases them from College W's bookstore will receive a bill directly from the college. Charles bought the books from a friend, so what was paid for them isn't a qualified education expense. Donna bought the books at College W's bookstore. Although Donna paid College W directly for the first-year books and materials, the payment isn't a qualified expense because the books and materials aren't required to be purchased from College W for enrollment or attendance at the institution.
When Marci enrolled at College X for freshman year, a separate student activity fee in addition to tuition had to be paid. This activity fee is required of all students, and is used solely to fund on-campus organizations and activities run by students, such as the student newspaper and student government. No portion of the fee covers personal expenses. Although labeled as a student activity fee, the fee is required for Marci's enrollment and attendance at College X. Therefore, it is a qualified expense.
Deduct higher education expenses on your income tax return (as, for example, a business expense) and also claim a lifetime learning credit based on those same expenses.
Claim a lifetime learning credit for any student and use any of that student's expenses in figuring your American opportunity credit.
Claim a lifetime learning credit based on the same expenses used to figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or qualified tuition program (QTP). See Coordination With American Opportunity and Lifetime Learning Credits in chapter 6 and Coordination With American Opportunity and Lifetime Learning Credits in chapter 7.
Figure 3-1. Can You Claim the Lifetime Learning Credit for 2022?
Summary: This flowchart is used to determine if you qualify to claim the lifetime learning credit for 2022.
For additional note, continue to Footnote 1.
For any part of 2022, were you (or your spouse) a nonresident alien who didn't elect to be treated as a resident alien for tax purposes?
Do you have a tax liability (Form 1040 or 1040-SR, line 18, minus Schedule 3 (Form 1040), lines 1, 2, 6d, and 6l)?
Are you claiming an American opportunity credit for the same student?
Decision (11)
Were the same expenses paid with a tax-free scholarship, grant, or employer-provided assistance?
Decision (12)
Did you, or someone else, receive a refund of all the expenses?
You can't claim the lifetime learning credit for 2022.
You can claim the lifetime learning credit for 2022. For additional note, continue to Footnote 2.
Footnote 1: Qualified education expenses paid by a dependent you claim on your tax return or by a third party for that dependent, are considered paid by you.
Footnote 2: Your education credits may be limited to your tax liability minus certain credits. See Form 8863 for more details.
The tax-free part of scholarships and fellowship grants (see Tax-Free Scholarships and Fellowship Grants in chapter 1 );
The scholarship or fellowship grant (or any part of it) must be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1 .
The scholarship or fellowship grant (or any part of it) may be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1 .
If any tax-free educational assistance for the qualified education expenses paid in 2022 or any refund of your qualified education expenses paid in 2022 is received after you file your 2022 income tax return, you must recapture (repay) any excess credit. You do this by refiguring the amount of your adjusted qualified education expenses for 2022 by reducing the expenses by the amount of the refund or tax-free educational assistance. You then refigure your education credit(s) for 2022 and figure the amount by which your 2022 tax liability would have increased if you had claimed the refigured credit(s). Include that amount as an additional tax for the year the refund or tax-free assistance was received.
You pay $9,300 in tuition and fees in December 2022, and your child began college in January 2023. You filed your 2022 tax return on February 14, 2023, and claimed a lifetime learning credit of $1,860. You claimed no other tax credits. After you filed your return, your child withdrew from two courses and you received a refund of $2,900. You must refigure your 2022 lifetime learning credit using $6,400 of qualified education expenses instead of $9,300. The refigured credit is $1,280 and your tax liability increased by $580. See the instructions for your 2023 income tax return to determine where to include this tax.
The use of the money is restricted, by the terms of the scholarship or fellowship grant, to costs of attendance (such as room and board) other than qualified education expenses, as defined in Qualified education expenses in chapter 1 .
You may be able to increase your lifetime learning credit when the student (you, your spouse, or your dependent) includes certain scholarships or fellowship grants in the student’s gross income. Your credit may increase only if the amount of the student's qualified education expenses minus the total amount of scholarships and fellowship grants is less than $10,000. If this situation applies, consider including some or all of the scholarship or fellowship grant in the student's income in order to treat the included amount as paying nonqualified expenses instead of qualified education expenses. Nonqualified expenses are expenses such as room and board that aren't qualified education expenses such as tuition and related fees.
Scholarships and fellowship grants that the student includes in income don't reduce the student's qualified education expenses available to figure your lifetime learning credit. Thus, including enough of the scholarship or fellowship grant in the student's income to report up to $10,000 in qualified education expenses for your lifetime learning credit may increase the credit by enough to increase your tax refund or reduce the amount of tax you owe even considering any increased tax liability from the additional income. However, the increase in tax liability as well as the loss of other tax credits may be greater than the additional lifetime learning credit and may cause your tax refund to decrease or the amount of tax you owe to increase. Your specific circumstances will determine what amount, if any, of the scholarship or fellowship grant to include in income to maximize your tax refund or minimize the amount of tax you owe.
The scholarship or fellowship grant must be one that may qualify as a tax-free scholarship under the rules discussed in chapter 1 . Also, the scholarship or fellowship grant must be one that may (by its terms) be used for nonqualified expenses. Finally, the amount of the scholarship or fellowship grant that is applied to nonqualified expenses can't exceed the amount of the student's actual nonqualified expenses that are paid in the tax year. This amount may differ from the student's living expenses estimated by the student's school in figuring the official cost of attendance under student aid rules.
The fact that the educational institution applies the scholarship or fellowship grant to qualified education expenses, such as tuition and related fees, doesn't prevent the student from choosing to apply certain scholarships or fellowship grants to the student's actual nonqualified expenses. By making this choice (that is, by including the part of the scholarship or fellowship grant applied to the student's nonqualified expenses in income), the student may increase taxable income and may be required to file a tax return. But this allows payments made in cash, by check, by credit or debit card, or with borrowed funds such as a student loan to be applied to qualified education expenses.
Judy, who is unmarried, is taking courses at a public community college to be recertified to teach in public schools. The adjusted gross income (AGI) and the MAGI, for purposes of the credit, are $27,800. Judy claims the standard deduction of $12,950, resulting in taxable income of $14,850 and a tax liability before credits of $1,580. Judy claims no credits other than the lifetime learning credit. In July 2022, Judy paid $700 for the summer 2022 semester; in August 2022, Judy paid $1,900 for the fall 2022 semester; and in December 2022, Judy paid another $1,900 for the spring semester beginning in January 2023. Judy and the college meet all requirements for the lifetime learning credit. All of the $4,500 tuition paid in 2022 can be used when figuring the 2022 lifetime learning credit. Judy claims a $900 lifetime learning credit and the tax liability after credits is $680.
The facts are the same as in Example 1—No scholarship , except that Judy was awarded a $1,500 scholarship. Under the terms of the scholarship, it may be used to pay any educational expenses, including room and board. If the scholarship is excluded from income, Judy will be deemed (for purposes of figuring the education credit) to have applied the scholarship to pay for tuition, required fees, and course materials. Only $3,000 of the $4,500 tuition paid in 2022 could be used when figuring the 2022 lifetime learning credit. The lifetime learning credit would be reduced to $600 and the tax liability after credits would be $980.
Example 3—Scholarship included in income.
The facts are the same as in Example 2—Scholarship excluded from income . If, unlike Example 2 , Judy includes the $1,500 scholarship in income, Judy will be deemed to have applied the entire scholarship to pay for room and board. Judy's AGI and MAGI would increase to $29,300, the taxable income would be $16,350, and the tax liability before credits would be $1,760. Judy would be able to use the $4,500 of adjusted qualified education expenses to figure the credit. Judy could claim a $900 lifetime learning credit and the tax liability after credits would be $860.
The facts are the same as in Example 3—Scholarship included in income , except the $1,500 scholarship is paid directly to the public community college. The fact that the public community college applies the scholarship to Judy's tuition and related fees doesn't prevent Judy from including the $1,500 scholarship in income. As in Example 3 , by doing so, Judy will be deemed to have applied the entire scholarship to pay for room and board. Judy could claim the $900 lifetime learning credit and the tax liability after credits would be $860.
Whether you will benefit from applying a scholarship or fellowship grant to nonqualified expenses will depend on the amount of the student's qualified education expenses, the amount of the scholarship or fellowship grant, and whether the scholarship or fellowship grant may (by its terms) be used for nonqualified expenses. Any benefit will also depend on the student's federal and state marginal tax rates as well as any federal and state tax credits the student claims. Before deciding, look at the total amount of your federal and state tax refunds or taxes owed and, if the student is your dependent, the student's tax refunds or taxes owed. For example, if you are the student and you also claim the earned income credit, choosing to apply a scholarship or fellowship grant to nonqualified expenses by including the amount in your income may not benefit you if the decrease to your earned income credit as a result of including the scholarship or fellowship grant in income is more than the increase to your lifetime learning credit as a result of including this amount in income.
Qualified education expenses generally don't include expenses that relate to any course of instruction or other education that involves sports, games, or hobbies, or any noncredit course. However, if the course of instruction or other education is part of the student's degree program or is taken by the student to acquire or improve job skills, these expenses can qualify.
Some eligible educational institutions combine all of their fees for an academic period into one amount. If you don't receive or don't have access to an allocation showing how much you paid for qualified education expenses and how much you paid for personal expenses, such as those listed above, contact the institution. The institution is generally required to make this allocation and provide you with the amount you paid for qualified education expenses on Form 1098-T. See Figuring the Credit , later, for more information about Form 1098-T.
For purposes of the lifetime learning credit, an eligible student is a student who is enrolled in one or more courses at an eligible educational institution (as defined under Qualified Education Expenses , earlier).
If there are qualified education expenses for your dependent during a tax year, either you or your dependent, but not both of you, can claim a lifetime learning credit for your dependent's expenses for that year.
For you to claim a lifetime learning credit for your dependent's expenses, you must also claim your dependent on your tax return. You do this by listing your dependent's name and other required information on Form 1040 or 1040-SR.
If you claim on your tax return an eligible student who is your dependent, treat any expenses paid (or deemed paid) by your dependent as if you had paid them. Include these expenses when figuring the amount of your lifetime learning credit.
If you claim a dependent who is an eligible student, only you can include any expenses you paid when figuring the amount of the lifetime learning credit. If neither you nor anyone else claims the dependent, only the dependent can include any expenses you paid when figuring the lifetime learning credit.
In 2022, Todd’s grandparent makes a payment directly to an eligible educational institution for Todd‘s qualified education expenses. For purposes of claiming a lifetime learning credit, Todd is treated as receiving the money from the grandparent and, in turn, paying the qualified education expenses.
Unless Todd is claimed as a dependent on someone else's 2022 tax return, only Todd can use the payment to claim a lifetime learning credit.
If anyone, such as Todd's parents, claims Todd on their 2022 tax return, whoever claims Todd may be able to use the expenses to claim a lifetime learning credit. If anyone else claims Todd, Todd can't claim a lifetime learning credit.
When an eligible educational institution provides a reduction in tuition to an employee of the institution (or spouse or dependent child of an employee), the amount of the reduction may or may not be taxable. If it is taxable, the employee is treated as receiving a payment of that amount and, in turn, paying it to the educational institution on behalf of the student. For more information on tuition reductions, see Qualified Tuition Reduction in chapter 1 .
The amount of the lifetime learning credit is 20% of the first $10,000 of qualified education expenses you paid for all eligible students. The maximum amount of lifetime learning credit you can claim for 2022 is $2,000 (20% × $10,000). However, that amount may be reduced based on your MAGI. See Effect of the Amount of Your Income on the Amount of Your Credit , later.
Bruce and Toni are married and file a joint tax return. For 2022, their MAGI is $75,000. Toni is attending a local college (an eligible educational institution) to earn credits toward a degree in nursing. Toni already has a bachelor's degree in history and wants to become a nurse. In August 2022, Toni paid $5,000 of qualified education expenses for the fall 2022 semester. Bruce and Toni can claim a $1,000 (20% × $5,000) lifetime learning credit on their 2022 joint tax return.
To help you figure your lifetime learning credit, the student may receive Form 1098-T. Generally, an eligible educational institution (such as a college or university) must send Form 1098-T (or acceptable substitute) to each enrolled student by January 31, 2023. An institution will report payments received (box 1) for qualified education expenses. However, the amount on Form 1098-T might be different from what you paid. When figuring the credit, use only the amounts you paid or are deemed to have paid in 2022 for qualified education expenses.
The eligible educational institution may ask for a completed Form W-9S or similar statement to obtain the student's name, address, and taxpayer identification number.
The amount of your lifetime learning credit is phased out (gradually reduced) if your MAGI is between $80,000 and $90,000 ($160,000 and $180,000 if you file a joint return). You can't claim a lifetime learning credit if your MAGI is $90,000 or more ($180,000 or more if you file a joint return).
Worksheet 3-1. MAGI for the Lifetime Learning Credit
If your MAGI is within the range of incomes where the credit must be reduced, you will figure your reduced credit using lines 10–18 of Form 8863. The same method is shown in the following example.
You are filing a joint return with a MAGI of $161,000. In 2022, you paid $6,600 of qualified education expenses.
You figure the tentative lifetime learning credit (20% of the first $10,000 of qualified education expenses you paid for all eligible students). The result is a $1,320 (20% x $6,600) tentative credit.
Because your MAGI is within the range of incomes where the credit must be reduced, you must multiply your tentative credit ($1,320) by a fraction. The numerator (top part) of the fraction is $180,000 (the upper limit for those filing a joint return) minus your MAGI. The denominator (bottom part) is $20,000, the range of incomes for the phaseout ($160,000 to $180,000). The result is the amount of your phased-out (reduced) lifetime learning credit ($1,254).
You claim the lifetime learning credit by completing Form 8863 and submitting it with your Form 1040 or 1040-SR. Enter the credit on Schedule 3 (Form 1040), line 3.
4. Student Loan Interest Deduction
Modified adjusted gross income (MAGI) limits. For 2022, the amount of your student loan interest deduction is gradually reduced (phased out) if your MAGI is between $70,000 and $85,000 ($145,000 and $175,000 if you file a joint return). You can’t claim the deduction if your MAGI is $85,000 or more ($175,000 or more if you file a joint return). For more information, see Figuring the Deduction .
No double benefit allowed. You can’t deduct as interest on a student loan any interest paid by your employer after March 27, 2020, and before January 1, 2026, under an educational assistance program. See No Double Benefit Allowed .
Generally, personal interest you pay, other than certain mortgage interest, isn't deductible on your tax return. However, if your MAGI is less than $85,000 ($175,000 if filing a joint return), you may be allowed a special deduction for paying interest on a student loan (also known as an education loan) used for higher education. For most taxpayers, MAGI is the adjusted gross income (AGI) as figured on their federal income tax return before subtracting any deduction for student loan interest. This deduction can reduce the amount of your income subject to tax by up to $2,500.
The student loan interest deduction is claimed as an adjustment to income. This means you can claim this deduction even if you don't itemize deductions on Schedule A (Form 1040).
What type of loan interest you can deduct,
Whether you can claim the deduction,
What expenses you must have paid with the student loan,
How to figure the deduction, and
How to claim the deduction.
Table 4-1. Student Loan Interest Deduction at a Glance
Student loan interest defined.
Student loan interest is interest you paid during the year on a qualified student loan. It includes both required and voluntary interest payments.
Qualified Student Loan
This is a loan you took out solely to pay qualified education expenses (defined later) that were:
For you, your spouse, or a person who was your dependent (as defined later for this purpose) when you took out the loan;
Paid or incurred within a reasonable period of time before or after you took out the loan; and
For education provided during an academic period for an eligible student.
Loans from the following sources aren't qualified student loans.
A related person.
A qualified employer plan.
Generally, your dependent is someone who is either a:
Qualifying child, or
Qualifying relative.
For this purpose, the term “dependent” also includes any person you could have claimed as a dependent on your return except that:
You, or your spouse if filing jointly, could be claimed as a dependent of another taxpayer (like on your parent’s tax return);
The person filed a joint return; or
The person had gross income for the year that was equal to or more than $4,400 (for 2022).
Qualified education expenses are treated as paid or incurred within a reasonable period of time before or after you take out the loan if they are paid with the proceeds of student loans that are part of a federal postsecondary education loan program.
Even if not paid with the proceeds of that type of loan, the expenses are treated as paid or incurred within a reasonable period of time if both of the following requirements are met.
The expenses relate to a specific academic period.
The loan proceeds are disbursed within a period that begins 90 days before the start of that academic period and ends 90 days after the end of that academic period.
If neither of the above situations applies, the reasonable period of time is usually determined based on all the relevant facts and circumstances.
An eligible student is a student who was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential.
A student was enrolled at least half-time if the student was taking at least half the normal full-time workload for their course of study.
You can't deduct interest on a loan you get from a related person. Related persons include:
Your spouse;
Your brothers and sisters;
Your half brothers and half sisters;
Your ancestors (parents, grandparents, etc.);
Your lineal descendants (children, grandchildren, etc.); and
Certain corporations, partnerships, trusts, and exempt organizations.
You can't deduct interest on a loan made under a qualified employer plan or under a contract purchased under such a plan.
For purposes of the student loan interest deduction, these expenses are the total costs of attending an eligible educational institution. They include amounts paid for the following items.
Tuition and fees.
Room and board.
Books, supplies, and equipment.
Other necessary expenses (such as transportation).
The cost of room and board qualifies only to the extent it isn't more than:
The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student; or
If greater, the actual amount charged if the student is residing in housing owned or operated by the eligible educational institution.
An eligible educational institution also includes certain educational institutions located outside the United States that are eligible to participate in the U.S. Department of Education's Federal Student Aid (FSA) programs.
For purposes of the student loan interest deduction, an eligible educational institution also includes an institution conducting an internship or residency program leading to a degree or certificate from an institution of higher education, a hospital, or a health care facility that offers postgraduate training.
An educational institution must meet the above criteria only during the academic period(s) for which the student loan was incurred. The deductibility of interest on the loan isn't affected by the institution's subsequent loss of eligibility.
You must reduce your qualified education expenses by the total amount paid for them with the following tax-free items.
Employer-provided educational assistance. See chapter 10 .
Tax-free distribution of earnings from a Coverdell education savings account (ESA). See Tax-Free Distributions in chapter 6 .
Tax-free distribution of earnings from a qualified tuition program (QTP). See Figuring the Taxable Portion of a Distribution in chapter 7 .
U.S. savings bond interest that you exclude from income because it is used to pay qualified education expenses. See chapter 9 .
The tax-free part of scholarships and fellowship grants. See Tax-Free Scholarships and Fellowship Grants in chapter 1 .
Veterans' educational assistance. See Veterans' Benefits in chapter 1 .
Include as Interest
In addition to simple interest on the loan, if all other requirements are met, the items discussed below can be student loan interest.
In general, this is a one-time fee charged by the lender when a loan is made. To be deductible as interest, a loan origination fee must be for the use of money rather than for property or services (such as commitment fees or processing costs) provided by the lender. A loan origination fee treated as interest accrues over the life of the loan.
Loan origination fees weren't required to be reported on Form 1098-E, Student Loan Interest Statement, for loans made before September 1, 2004. If loan origination fees aren't included in the amount reported on your Form 1098-E, you can use any reasonable method to allocate the loan origination fees over the term of the loan.
This is unpaid interest on a student loan that is added by the lender to the outstanding principal balance of the loan. Capitalized interest is treated as interest for tax purposes and is deductible as payments of principal are made on the loan. No deduction for capitalized interest is allowed in a year in which no loan payments were made.
This interest, which includes interest on credit card debt, is student loan interest if the borrower uses the line of credit (credit card) only to pay qualified education expenses. See Qualified Education Expenses , earlier.
This includes interest on a loan used solely to refinance a qualified student loan of the same borrower. It also includes a single consolidation loan used solely to refinance two or more qualified student loans of the same borrower.
The allocation of payments between interest and principal for tax purposes might not be the same as the allocation shown on the Form 1098-E or other statement you receive from the lender or loan servicer. To make the allocation for tax purposes, a payment generally applies first to stated interest that remains unpaid as of the date the payment is due, second to any loan origination fees allocable to the payment, third to any capitalized interest that remains unpaid as of the date the payment is due, and fourth to the outstanding principal.
In August 2021, you took out a $10,000 student loan to pay the tuition for your senior year of college. The lender charged a 3% loan origination fee ($300) that was withheld from the funds you received. The interest (5% simple) on this loan accrued while you completed your senior year and for 6 months after graduating. At the end of that period, the lender determined the amount to be repaid by capitalizing all accrued but unpaid interest ($625 interest accrued from August 2021 through October 2022) and adding it to the outstanding principal balance of the loan. The loan is payable over 60 months, with a payment of $200.51 due on the first of each month, beginning November 2022.
You didn't receive a Form 1098-E for 2022 from the lender because the amount of interest you paid didn't require the lender to issue an information return. However, you did receive an account statement from the lender that showed the following 2022 payments on your outstanding loan of $10,625 ($10,000 principal + $625 accrued but unpaid interest).
To determine the amount of interest that could be deducted on the loan for 2022, you start with the total amount of stated interest you paid, $87.89. Next, allocate the loan origination fee over the term of the loan ($300 ÷ 60 months = $5 per month). A total of $10 ($5 of each of the two principal payments) should be treated as interest for tax purposes. You then apply the unpaid capitalized interest ($625) to the two principal payments in the order in which they were made, and determine that the remaining amount of principal of both payments is treated as interest for tax purposes. Assuming that you qualify to claim the student loan interest deduction, you can deduct $401.02 ($87.89 + $10 + $303.13).
For 2023, you will continue to allocate $5 of the loan origination fee to the principal portion of each monthly payment you make and treat that amount as interest for tax purposes. You will also apply the remaining amount of capitalized interest ($625 − $303.13 = $321.87) to the principal payments in the order in which they are made until the balance is zero, and treat those amounts as interest for tax purposes.
You can't claim a student loan interest deduction for any of the following items.
Interest you paid on a loan if, under the terms of the loan, you aren't legally obligated to make interest payments.
Loan origination fees that are payments for property or services provided by the lender, such as commitment fees or processing costs.
Interest you paid on a loan to the extent payments were made through your participation in the National Health Service Corps Loan Repayment Program (the NHSC Loan Repayment Program) or certain other loan repayment assistance programs. For more information, see Student Loan Repayment Assistance in chapter 5 .
You can deduct all interest you paid during the year on your student loan, including voluntary payments, until the loan is paid off.
Can You Claim the Deduction?
Generally, you can claim the deduction if all of the following requirements are met.
Your filing status is any filing status except married filing separately.
No one else is claiming you as a dependent on their tax return.
You are legally obligated to pay interest on a qualified student loan.
You paid interest on a qualified student loan.
Another taxpayer is claiming you as a dependent if they list your name and other required information on page 1 of their Form 1040, 1040-SR, or 1040-NR.
During 2022, you paid $600 interest on your qualified student loan. Only you are legally obligated to make the payments. No one claimed you as a dependent for 2022. Assuming all other requirements are met, you can deduct the $600 of interest you paid on your 2022 Form 1040 or 1040-SR.
During 2022, you paid $1,100 interest on your qualified student loan. Only you are legally obligated to make the payments. Your parents claimed you as a dependent on their 2022 tax return. In this case, neither you nor your parents may deduct the student loan interest you paid in 2022.
If you are the person legally obligated to make interest payments and someone else makes a payment of interest on your behalf, you are treated as receiving the payments from the other person and, in turn, paying the interest.
You obtained a qualified student loan to attend college. After graduating from college, you worked as an intern for a nonprofit organization. As part of the internship program, the nonprofit organization made an interest payment on your behalf. This payment was treated as additional compensation and reported in box 1 of your Form W-2. Assuming all other qualifications are met, you can deduct this payment of interest on your tax return.
You obtained a qualified student loan to attend college. After graduating from college, the first monthly payment on the loan was due in December. As a gift, your mother made this payment. No one is claiming you as a dependent on their tax return. Assuming all other qualifications are met, you can deduct this payment of interest on your tax return.
You can't deduct as interest on a student loan any amount that is an allowable deduction under any other provision of the tax law (for example, home mortgage interest).
You also can't deduct as interest on a student loan any amount paid from a distribution of earnings made from a QTP after 2018 to the extent the earnings are treated as tax free because they were used to pay student loan interest. For more information, see chapter 7 .
For payments made after March 27, 2020, and before January 1, 2026, do not deduct as interest on a student loan any interest paid by your employer under an educational assistance program. See chapter 10 .
Figuring the Deduction
Your student loan interest deduction is generally the smaller of:
The interest you paid during the tax year.
To help you figure your student loan interest deduction, you should receive Form 1098-E. Generally, an institution (such as a bank or governmental agency) that received interest payments of $600 or more during 2022 on one or more qualified student loans must send Form 1098-E (or an acceptable substitute) to each borrower by January 31, 2023.
For qualified student loans taken out before September 1, 2004, the institution is required to include on Form 1098-E only payments of stated interest. Other interest payments, such as certain loan origination fees and capitalized interest, may not appear on the form you receive. However, if you pay qualifying interest that isn't included on Form 1098-E, you can also deduct those amounts. See Allocating Payments Between Interest and Principal , earlier.
The lender may ask for a completed Form W-9S or similar statement to obtain the borrower's name, address, and taxpayer identification number. The form may also be used by the borrower to certify that the student loan was incurred solely to pay for qualified education expenses.
Effect of the Amount of Your Income on the Amount of Your Deduction
The amount of your student loan interest deduction is phased out (gradually reduced) if your MAGI is between $70,000 and $85,000 ($145,000 and $175,000 if you file a joint return). You can't claim a student loan interest deduction if your MAGI is $85,000 or more ($175,000 or more if you file a joint return).
For most taxpayers, MAGI is AGI as figured on their federal income tax return before subtracting any deduction for student loan interest. However, as discussed below, there may be other modifications.
Table 4-2 shows how the amount of your MAGI can affect your student loan interest deduction.
Table 4-2. Effect of MAGI on Student Loan Interest Deduction
If you file Form 1040 or 1040-SR, your MAGI is the AGI on line 11 of that form figured without taking into account any amount on Schedule 1 (Form 1040), line 21 (student loan interest deduction), and modified by adding back any:
If you file Form 1040-NR, your MAGI is the AGI on line 11 of that form figured without taking into account any amount on Schedule 1 (Form 1040), line 21 (student loan interest deduction).
If your MAGI is within the range of incomes where the credit must be reduced, you must figure your reduced deduction. To figure the phaseout, multiply your interest deduction (before the phaseout, but not more than $2,500) by a fraction. The numerator (top part) is your MAGI minus $70,000 ($145,000 in the case of a joint return). The denominator (bottom part) is $15,000 ($30,000 in the case of a joint return). Subtract the result from your deduction (before the phaseout) to give you the amount you can deduct.
During 2022, you paid $800 interest on a qualified student loan. Your 2022 MAGI is $160,000 and you are filing a joint return. You must reduce your deduction by $400, figured as follows.
The facts are the same as in Example 1 , except that you paid $2,750 interest. Your maximum deduction for 2022 is $2,500. You must reduce your maximum deduction by $1,250, figured as follows.
Generally, you figure the deduction using the Student Loan Interest Deduction Worksheet in the Schedule 1 (Form 1040) instructions included in the Instructions for Form 1040. However, if you are filing Form 2555, Foreign Earned Income; Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa; or you are excluding income from sources within Puerto Rico, you must complete Worksheet 4-1.
The student loan interest deduction is an adjustment to income. To claim the deduction, enter the allowable amount on Schedule 1 (Form 1040), line 21.
Worksheet 4-1. Student Loan Interest Deduction Worksheet
5. student loan cancellations and repayment assistance.
Student loan forgiveness. The American Rescue Plan Act of 2021 modified the treatment of student loan forgiveness for discharges in 2021 through 2025.
Generally, if you are responsible for making loan payments, and the loan is canceled or repaid by someone else, you must include the amount that was canceled or paid on your behalf in your gross income for tax purposes. However, in certain circumstances, you may be able to exclude this amount from gross income if the loan was one of the following.
A loan for postsecondary educational expenses.
A private education loan.
A loan from an educational organization described in section 170(b)(1)(A)(ii).
A loan from an organization exempt from tax under section 501(a) to refinance a student loan.
Loan for Postsecondary Educational Expenses
This is any loan provided expressly for postsecondary education, regardless of whether provided through the educational institution or directly to the borrower, if such loan was made, insured, or guaranteed by one of the following.
The United States, or an instrumentality or agency thereof.
A state, territory, or possession of the United States; or the District of Columbia; or any political subdivision thereof.
An eligible educational institution.
Private Education Loan
A private education loan is a loan provided by a private educational lender that:
Is not made, insured, or guaranteed under Title IV of the Higher Education Act of 1965; and
Is issued expressly for postsecondary educational expenses to a borrower, regardless of whether the loan is provided through the educational institution that the student attends or directly to the borrower from the private educational lender. A private education loan does not include an extension of credit under an open-end consumer credit plan, a reverse mortgage transaction, a residential mortgage transaction, or any other loan that is secured by real property or a dwelling.
A private educational lender is one of the following.
A financial institution that solicits, makes, or extends private education loans.
A federal credit union that solicits, makes, or extends private education loans.
Any other person engaged in the business of soliciting, making, or extending private education loans.
Loan From an Educational Organization Described in Section 170(b)(1)(A)(ii)
This is any loan made by the organization if the loan is made:
As part of an agreement with an entity described earlier under which the funds to make the loan were provided to the educational organization, or
Under a program of the educational organization that is designed to encourage its students to serve in occupations with unmet needs or in areas with unmet needs where the services provided by the students (or former students) are for or under the direction of a governmental unit or a tax-exempt section 501(c)(3) organization.
This is an educational institution that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities.
This is any corporation, community chest, fund, or foundation organized and operated exclusively for one or more of the following purposes.
Charitable.
Educational.
Scientific.
Testing for public safety.
Fostering national or international amateur sports competition (but only if none of its activities involve providing athletic facilities or equipment).
The prevention of cruelty to children or animals.
If you refinanced a student loan with another loan from an educational organization or a tax-exempt organization, the cancellation of that loan may also be treated as discussed above. This applies if the new loan is made under a program of the refinancing organization that is designed to encourage students to serve in occupations with unmet needs or in areas with unmet needs where the services required of the students are for or under the direction of a governmental unit or a tax-exempt section 501(c)(3) organization (defined earlier).
Student loan repayments made to you are tax free if you received them for any of the following.
The National Health Service Corps Loan Repayment Program (NHSC Loan Repayment Program).
A state education loan repayment program eligible for funds under the Public Health Service Act.
Any other state loan repayment or loan forgiveness program that is intended to provide for the increased availability of health services in underserved or health professional shortage areas (as determined by such state).
6. Coverdell Education Savings Account (ESA)
If your modified adjusted gross income (MAGI) is less than $110,000 ($220,000 if filing a joint return), you may be able to establish a Coverdell ESA to finance the qualified education expenses of a designated beneficiary. For most taxpayers, MAGI is the adjusted gross income (AGI) as figured on their federal income tax return.
Total contributions for the beneficiary in any year can't be more than $2,000, no matter how many separate Coverdell ESAs have been established for the beneficiary. See Contributions , later.
Contributions to a Coverdell ESA aren't deductible, but amounts deposited in the account grow tax free until distributed.
If, for a year, distributions from an account aren't more than a designated beneficiary's adjusted qualified education expenses (AQEE) at an eligible educational institution, the beneficiary won't owe tax on the distributions. See Tax-Free Distributions , later.
Table 6-1 summarizes the main features of the Coverdell ESA.
Table 6-1. Coverdell ESA at a Glance
What Is a Coverdell ESA?
A Coverdell ESA is a trust or custodial account created or organized in the United States only for the purpose of paying the qualified education expenses of the Designated beneficiary (defined later) of the account.
When the account is established, the designated beneficiary must be under age 18 or a special needs beneficiary.
To be treated as a Coverdell ESA, the account must be designated as a Coverdell ESA when it is created.
The document creating and governing the account must be in writing and must satisfy the following requirements.
The trustee or custodian must be a bank or an entity approved by the IRS.
The document must provide that the trustee or custodian can only accept a contribution that meets all of the following conditions.
The contribution is in cash.
The contribution is made before the beneficiary reaches age 18, unless the beneficiary is a special needs beneficiary.
The contribution wouldn't result in total contributions for the year (not including rollover contributions) being more than $2,000.
Money in the account can't be invested in life insurance contracts.
Money in the account can't be combined with other property except in a common trust fund or common investment fund.
The balance in the account must generally be distributed within 30 days after the earlier of the following events.
The beneficiary reaches age 30, unless the beneficiary is a special needs beneficiary.
The beneficiary's death.
Generally, these are expenses required for the enrollment or attendance of the designated beneficiary at an eligible educational institution. The expenses can be either qualified higher education expenses or qualified elementary and secondary education expenses.
This is the individual named in the document creating the trust or custodial account to receive the benefit of the funds in the account.
A contribution to a QTP is a qualified education expense if the contribution is on behalf of the designated beneficiary of the Coverdell ESA. In the case of a change in beneficiary, this is a qualified expense only if the new beneficiary is a family member of that designated beneficiary. See chapter 7 .
Eligible Educational Institution
An eligible educational institution can be either an eligible postsecondary school or an eligible elementary or secondary school.
An eligible postsecondary school is generally any accredited public, nonprofit, or proprietary (privately owned profit-making) college, university, vocational school, or other postsecondary educational institution. Also, the institution must be eligible to participate in a student aid program administered by the U.S. Department of Education. Virtually all accredited postsecondary institutions meet this definition. The educational institution should be able to tell you if it is an eligible educational institution.
An eligible elementary or secondary school is any public, private, or religious school that provides elementary or secondary education (kindergarten through grade 12), as determined under state law.
Qualified Higher Education Expenses
These are expenses related to enrollment or attendance at an eligible postsecondary school. As shown in the following list, to be qualified, some of the expenses must be required by the school and some must be incurred by students who are enrolled at least half-time.
The following expenses must be required for enrollment or attendance of a designated beneficiary at an eligible postsecondary school.
Expenses for special needs services needed by a special needs beneficiary must be incurred in connection with enrollment or attendance at an eligible postsecondary school.
Expenses for room and board must be incurred by students who are enrolled at least half-time (defined below).
The expense for room and board qualifies only to the extent that it isn't more than the greater of the following two amounts.
The allowance for room and board, as determined by the school, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student.
The actual amount charged if the student is residing in housing owned or operated by the school.
The purchase of computer or peripheral equipment, computer software, or Internet access and related services if it is to be used primarily by the beneficiary during any of the years the beneficiary is enrolled at an eligible postsecondary school. (This doesn’t include expenses for computer software for sports, games, or hobbies unless the software is predominantly educational in nature.)
A student is enrolled “at least half-time” if he or she is enrolled for at least half the full-time academic workload for the course of study the student is pursuing, as determined under the standards of the school where the student is enrolled.
These are expenses related to enrollment or attendance at an eligible elementary or secondary school. As shown in the following list, to be qualified, some of the expenses must be required or provided by the school. There are special rules for computer-related expenses.
The following expenses must be incurred by a designated beneficiary in connection with enrollment or attendance at an eligible elementary or secondary school.
Academic tutoring.
Special needs services for a special needs beneficiary.
The following expenses must be required or provided by an eligible elementary or secondary school in connection with attendance or enrollment at the school.
Transportation.
Supplementary items and services (including extended day programs).
The purchase of computer or peripheral equipment, computer software, fiber optic cables related to computer use, or Internet access and related services is a qualified elementary and secondary education expense if it is to be used by the beneficiary and the beneficiary's family during any of the years the beneficiary is in elementary or secondary school. (This doesn't include expenses for computer software designed for sports, games, or hobbies unless the software is predominantly educational in nature.)
Contributions
Any individual (including the designated beneficiary) can contribute to a Coverdell ESA if the individual's MAGI (defined later under Contribution Limits ) for the year is less than $110,000. For individuals filing joint returns, that amount is $220,000.
Organizations, such as corporations and trusts, can also contribute to Coverdell ESAs. There is no requirement that an organization's income be below a certain level.
Contributions must meet all of the following requirements.
They must be in cash.
They can't be made after the beneficiary reaches age 18, unless the beneficiary is a special needs beneficiary.
They must be made by the due date of the contributor's tax return (not including extensions).
Contributions can be made to one or several Coverdell ESAs for the same designated beneficiary provided that the total contributions aren't more than the contribution limits (defined later) for a year.
Contributions can be made, without penalty, to both a Coverdell ESA and a QTP in the same year for the same beneficiary.
Table 6-2 summarizes many of the features of contributing to a Coverdell ESA.
Table 6-2. Coverdell ESA Contributions at a Glance
Contributions made to a Coverdell ESA for the preceding tax year are considered to have been made on the last day of the preceding year. They must be made by the due date (not including extensions) for filing your return for the preceding year.
For example, if you make a contribution to a Coverdell ESA in February 2023, and you designate it as a contribution for 2022, you are considered to have made that contribution on December 31, 2022.
Contribution Limits
There are two yearly limits.
One on the total amount that can be contributed for each designated beneficiary in any year.
One on the amount that any individual can contribute for any one designated beneficiary for a year.
For 2022, the total of all contributions to all Coverdell ESAs set up for the benefit of any one designated beneficiary can't be more than $2,000. This includes contributions (other than rollovers) to all the beneficiary's Coverdell ESAs from all sources. Rollovers are discussed under Rollovers and Other Transfers , later.
When a beneficiary was born in 2021, three separate Coverdell ESAs were set up, one by the parents, one by a grandparent, and one by an aunt. In 2022, the total of all contributions to the three Coverdell ESAs can't be more than $2,000. For example, if the grandparent contributed $2,000 to one of the Coverdell ESAs, no one else could contribute to any of the three accounts. Or, if the parents contributed $1,000 and the aunt $600, the grandparent or someone else could contribute no more than $400. These contributions could be put into any of the beneficiary's Coverdell ESA accounts.
Generally, you can contribute up to $2,000 for each designated beneficiary for 2022. This is the most you can contribute for the benefit of any one beneficiary for the year, regardless of the number of Coverdell ESAs set up for the beneficiary.
The facts are the same as in the previous example except that the beneficiary's older sibling also has a Coverdell ESA. If the grandparent contributed $2,000 to the beneficary’s Coverdell ESA in 2022, the grandparent could also contribute $2,000 to the sibling's Coverdell ESA.
Your contribution limit may be reduced. If your MAGI (defined later) is between $95,000 and $110,000 (between $190,000 and $220,000 if filing a joint return), the $2,000 limit for each designated beneficiary is gradually reduced (see Figuring the limit , later). If your MAGI is $110,000 or more ($220,000 or more if filing a joint return), you can't contribute to anyone's Coverdell ESA.
If you have any of these adjustments, you can use Worksheet 6-1 to figure your MAGI for Form 1040 or 1040-SR.
If you file Form 1040-NR, your MAGI is the AGI on line 11 of that form.
Worksheet 6-1. MAGI for a Coverdell ESA
Figuring the limit.
To figure the limit on the amount you can contribute for each designated beneficiary, multiply $2,000 by a fraction. The numerator (top part) is your MAGI minus $95,000 ($190,000 if filing a joint return). The denominator (bottom part) is $15,000 ($30,000 if filing a joint return). Subtract the result from $2,000. This is the amount you can contribute for each beneficiary. You can use Worksheet 6-2 to figure the limit on contributions.
Worksheet 6-2. Coverdell ESA Contribution Limit
A taxpayer filing as single, had MAGI of $96,500 for 2022. The taxpayer can contribute up to $1,800 in 2022 for each beneficiary, as shown in the illustrated Worksheet 6-2 .
Worksheet 6-2. Coverdell ESA Contribution Limit—Illustrated
Additional tax on excess contributions.
The beneficiary may owe a 6% excise tax each year on excess contributions that are in a Coverdell ESA at the end of the year. Excess contributions are the total of the following two amounts.
Contributions to any designated beneficiary's Coverdell ESA for the year that are more than $2,000 (or, if less, the total of each contributor's limit for the year, as discussed earlier).
Excess contributions for the preceding year, reduced by the total of the following two amounts.
Distributions (other than those rolled over, as discussed later) during the year.
The contribution limit for the current year minus the amount contributed for the current year.
The excise tax doesn't apply if excess contributions made during 2022 (and any earnings on them) are distributed before the first day of the sixth month of the following tax year (June 1, 2023, for a calendar year taxpayer).
However, you must include the distributed earnings in gross income for the year in which the excess contribution was made. You should receive Form 1099-Q, Payments From Qualified Education Programs, from each institution from which excess contributions were distributed. Box 2 of that form will show the amount of earnings on your excess contributions. Code “2” or “3” entered in the blank box below boxes 5 and 6 indicates the year in which the earnings are taxable. See Instructions for Recipient of your Form 1099-Q, on the back of Copy B. Enter the amount of earnings on Schedule 1 (Form 1040), line 8z, for the applicable tax year. For more information, see Taxable Distributions , later.
The excise tax doesn't apply to any rollover contribution.
Contributions made in one year for the preceding tax year are considered to have been made on the last day of the preceding year.
In 2021, your parents and grandparents contributed a total of $2,300 to your Coverdell ESA—an excess contribution of $300. Because you didn't withdraw the excess before June 1, 2022, you had to pay an additional tax of $18 (6% × $300) when you filed your 2021 tax return.
In 2022, excess contributions of $500 were made to your account; however, you withdrew $250 from that account to use for qualified education expenses. Using the steps shown earlier under Additional Tax on Excess Contributions , you figure the excess contribution in your account at the end of 2022 as follows.
You figure this excise tax on Form 5329, Part V. Report the additional tax on Schedule 2 (Form 1040), line 8.
Rollovers and Other Transfers
Assets can be rolled over from one Coverdell ESA to another or the designated beneficiary can be changed. The beneficiary's interest can be transferred to a spouse or former spouse because of divorce.
Any amount distributed from a Coverdell ESA isn't taxable if it is rolled over to another Coverdell ESA for the benefit of the same beneficiary or a member of the beneficiary's family (including the beneficiary's spouse) who is under age 30. This age limitation doesn't apply if the new beneficiary is a special needs beneficiary.
An amount is rolled over if it is paid to another Coverdell ESA within 60 days after the date of the distribution.
Don't report qualifying rollovers (those that meet the above criteria) anywhere on Form 1040, 1040-SR, or 1040-NR. These aren't taxable distributions.
For these purposes, the beneficiary's family includes the beneficiary's spouse and the following other relatives of the beneficiary.
Son, daughter, stepchild, foster child, adopted child, or a descendant of any of them.
Brother, sister, stepbrother, or stepsister.
Father or mother or ancestor of either.
Stepfather or stepmother.
Son or daughter of a brother or sister.
Brother or sister of father or mother.
Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law.
The spouse of any individual listed above.
First cousin.
When you graduated from college in January last year, you had $5,000 left in your Coverdell ESA. You wanted to give this money to your younger sibling, who was still in high school. In order to avoid paying tax on the distribution of the amount remaining in your account, you contributed the same amount to your sibling’s Coverdell ESA within 60 days of the distribution.
If you received a military death gratuity or a payment from Servicemembers' Group Life Insurance (SGLI), you may roll over all or part of the amount received to one or more Coverdell ESAs for the benefit of members of the beneficiary's family (see Members of the beneficiary's family , earlier). Such payments are made to an eligible survivor upon the death of a member of the U.S. Armed Forces. The contribution to a Coverdell ESA from survivor benefits received can't be made later than 1 year after the date on which you receive the gratuity or SGLI payment.
This rollover contribution isn't subject to (but is in addition to) the contribution limits discussed earlier under Contribution Limits . The amount you roll over can't exceed the total survivor benefits you received, reduced by contributions from these benefits to a Roth IRA or other Coverdell ESAs.
The amount contributed from the survivor benefits is treated as part of your basis (cost) in the Coverdell ESA, and won't be taxed when distributed. See Distributions , later.
The designated beneficiary can be changed. See Members of the beneficiary's family , earlier. There aren't any tax consequences if, at the time of the change, the new beneficiary is under age 30 or is a special needs beneficiary.
Assume the same situation as in the last example (see Rollovers , earlier). Instead of closing your Coverdell ESA and paying the distribution into your sibling’s Coverdell ESA, you could have instructed the trustee of your account to simply change the name of the beneficiary on your account to that of your sibling.
If a spouse or former spouse receives a Coverdell ESA under a divorce or separation instrument, it isn't a taxable transfer. After the transfer, the spouse or former spouse treats the Coverdell ESA as their own.
In their divorce settlement, Taxpayer A received Taxpayer B’s Coverdell ESA. In this process, the account was transferred into Taxpayer A’s name. Taxpayer A now treats the funds in this Coverdell ESA as if they were the original owner.
Distributions
The designated beneficiary of a Coverdell ESA can take a distribution at any time. Whether the distributions are tax free depends, in part, on whether the distributions are equal to or less than the amount of Adjusted qualified education expenses (AQEE) (defined later) the beneficiary has in the same tax year.
See Table 6-3 for highlights.
Table 6-3. Coverdell ESA Distributions at a Glance
To determine if total distributions for the year are more than the amount of qualified education expenses, reduce total qualified education expenses by any tax-free educational assistance. Tax-free educational assistance includes:
Veterans' educational assistance (see Veterans' Benefits in chapter 1 );
Employer-provided educational assistance (see chapter 10 ); and
The amount you get by subtracting tax-free educational assistance from your total qualified education expenses is your AQEE.
Generally, distributions are tax free if they aren't more than the beneficiary's AQEE for the year. Don't report tax-free distributions (including qualifying rollovers) on your tax return.
Taxable Distributions
A portion of the distributions is generally taxable to the beneficiary if the total distributions are more than the beneficiary's AQEE for the year.
This is the part of the total distribution that is more than the beneficiary's AQEE for the year.
You will receive a Form 1099-Q for each of the Coverdell ESAs from which money was distributed in 2022. The amount of your gross distribution will be shown in box 1. For 2022, instead of dividing the gross distribution between your earnings (box 2) and your basis (amount already taxed) (box 3), the payer or trustee may report the fair market value (account balance) of the Coverdell ESA as of December 31, 2022. This will be shown in the blank box below boxes 5 and 6.
The amount contributed from survivor benefits (see Military death gratuity , earlier) is treated as part of your basis and won't be taxed when distributed.
The taxable portion is the amount of the excess distribution that represents earnings that have accumulated tax free in the account. Figure the taxable portion for 2022 as shown in the following steps.
Multiply the total amount distributed by a fraction. The numerator (top part) is the basis (contributions not previously distributed) at the end of 2021, plus total contributions for 2022, and the denominator (bottom part) is the value (balance) of the account at the end of 2022 plus the amount distributed during 2022.
Subtract the amount figured in (1) from the total amount distributed during 2022. The result is the amount of earnings included in the distribution(s).
Multiply the amount of earnings figured in (2) by a fraction. The numerator (top part) is the AQEE paid during 2022, and the denominator (bottom part) is the total amount distributed during 2022.
Subtract the amount figured in (3) from the amount figured in (2). The result is the amount the beneficiary must include in income.
The taxable amount must be reported on Schedule 1 (Form 1040), line 8z.
You received an $850 distribution from your Coverdell ESA, to which $1,500 had been contributed before 2022. There were no contributions in 2022. This is your first distribution from the account, so your basis in the account on December 31, 2021, was $1,500. The value (balance) of your account on December 31, 2022, was $950. You had $700 of AQEE for the year. Using the steps in Figuring the Taxable Portion of a Distribution , earlier, figure the taxable portion of your distribution as follows.
Worksheet 6-3 , at the end of this chapter, can help you figure your AQEE, how much of your distribution must be included in income, and the remaining basis in your Coverdell ESA(s).
The American opportunity or lifetime learning credit can be claimed in the same year the beneficiary takes a tax-free distribution from a Coverdell ESA, as long as the same expenses aren't used for both benefits. This means the beneficiary must reduce qualified higher education expenses (QHEE) by tax-free educational assistance, and then further reduce them by any expenses taken into account in determining an American opportunity or lifetime learning credit.
In 2022, during your first year in college you had $5,800 of QHEE. You paid your college expenses from the following sources.
Before you can determine the taxable portion of your Coverdell ESA distribution, you must reduce your total QHEE.
If a designated beneficiary receives distributions from both a Coverdell ESA and a QTP in the same year, and the total distribution is more than the beneficiary's AQEE, those expenses must be allocated between the distribution from the Coverdell ESA and the distribution from the QTP before figuring how much of each distribution is taxable. The following two examples illustrate possible allocations.
In 2022, you graduated from high school and began your first semester of college. That year, you had $1,000 of qualified elementary and secondary education expenses (QESEE) for high school and $3,000 of QHEE for college. Your QESEE doesn't include tuition. To pay these expenses, you withdrew $800 from your Coverdell ESA and $4,200 from your QTP. No one claimed you as a dependent, nor were you eligible for an education credit. You didn't receive any tax-free educational assistance in 2022. You must allocate your total qualified education expenses between the two distributions.
You know that tax-free treatment will be available if you apply your $800 Coverdell ESA distribution toward your $1,000 of qualified education expenses for high school. The qualified expenses are greater than the distribution, making the $800 Coverdell ESA distribution tax free.
Next, you match your $4,200 QTP distribution to your $3,000 of QHEE, and find you have an excess QTP distribution of $1,200 ($4,200 QTP − $3,000 QHEE). You can't use the extra $200 of high school expenses (from (1) above) against the QTP distribution because those expenses are not high school tuition expenses and don't qualify a QTP for tax-free treatment.
Finally, you figure the taxable and tax-free portions of your QTP distribution based on your $3,000 of QHEE. (See Figuring the Taxable Portion of a Distribution in chapter 7 for more information.)
Assume the same facts as in Example 1 , except that you withdrew $1,800 from your Coverdell ESA and $3,200 from your QTP. In this case, you allocate your qualified education expenses as follows.
Using the same reasoning as in Example 1 , you match $1,000 of your Coverdell ESA distribution to your $1,000 of QESEE—you have $800 of your distribution remaining.
Because higher education expenses can also qualify a Coverdell ESA distribution for tax-free treatment, you allocate your $3,000 of QHEE between the remaining $800 Coverdell ESA and the $3,200 QTP distributions ($4,000 total).
You then figure the taxable part of the following.
Coverdell ESA distribution based on qualified education expenses of $1,600 ($1,000 QESEE + $600 QHEE). See Figuring the Taxable Portion of a Distribution , earlier, in this chapter.
QTP distribution based on her $2,400 of QHEE (see Figuring the Taxable Portion of a Distribution in chapter 7 ).
For tax years beginning after 2017 and before 2026, if you have a loss on your investment in a Coverdell ESA, you can’t deduct the loss on your income tax return. You have a loss only when all amounts from that account have been distributed and the total distributions are less than your unrecovered basis. Your basis is the total amount of contributions to that Coverdell ESA.
Additional Tax on Taxable Distributions
Generally, if you receive a taxable distribution, you must also pay a 10% additional tax on the amount included in income.
The 10% additional tax doesn't apply to the following distributions.
Paid to a beneficiary (or to the estate of the designated beneficiary) on or after the death of the designated beneficiary.
Made because the designated beneficiary is disabled. A person is considered to be disabled if proof is provided showing there is a physical or mental impairment that substantially limits any gainful activity. A physician must determine that the person's condition can be expected to result in death or to be of long-continued and indefinite duration.
Included in income because the designated beneficiary received:
A tax-free scholarship or fellowship grant (see Tax-Free Scholarships and Fellowship Grants in chapter 1 );
Employer-provided educational assistance (see chapter 10 ); or
This exception applies only to the extent the distribution isn't more than the scholarship, allowance, or payment.
Made on account of the attendance of the designated beneficiary at a U.S. military academy (such as the USMA at West Point). This exception applies only to the extent that the amount of the distribution doesn't exceed the costs of advanced education (as defined in section 2005(d)(3) of title 10 of the U.S. Code) attributable to such attendance.
Included in income only because the qualified education expenses were taken into account in determining the American opportunity or lifetime learning credit (see Coordination With American Opportunity and Lifetime Learning Credits , earlier).
Made before June 1, 2023, of an excess 2022 contribution (and any earnings on it). The distributed earnings must be included in gross income for the year in which the excess contribution was made.
Use Part II of Form 5329 to figure any additional tax. Report the amount on Schedule 2 (Form 1040), line 8.
When Assets Must Be Distributed
Any assets remaining in a Coverdell ESA must be distributed when either one of the following two events occurs.
The designated beneficiary reaches age 30. In this case, the remaining assets must be distributed within 30 days after the beneficiary reaches age 30. However, this rule doesn't apply if the beneficiary is a special needs beneficiary.
The designated beneficiary dies. In this case, the remaining assets must generally be distributed within 30 days after the date of death.
If a Coverdell ESA is transferred to a surviving spouse or other family member as the result of the death of the designated beneficiary, the Coverdell ESA retains its status. (“Family member” was defined earlier under Rollovers .) This means the spouse or other family member can treat the Coverdell ESA as their own and doesn't need to withdraw the assets until they reach age 30. This age limitation doesn't apply if the new beneficiary is a special needs beneficiary. There are no tax consequences as a result of the transfer.
When a total distribution is made because the designated beneficiary either reached age 30 or died, the earnings that accumulated tax free in the account must be included in taxable income. You determine these earnings as shown in the following two steps.
Multiply the amount distributed by a fraction. The numerator (top part) is the basis (contributions not previously distributed) at the end of 2021 plus total contributions for 2022, and the denominator (bottom part) is the balance in the account at the end of 2022 plus the amount distributed during 2022.
Subtract the amount figured in (1) from the total amount distributed during 2022. The result is the amount of earnings included in the distribution.
For an example, see steps 1 and 2 of the Example under Figuring the Taxable Portion of a Distribution , earlier.
The beneficiary or other person receiving the distribution must report this amount on Schedule 1 (Form 1040), line 8z, listing the type and amount of income.
Worksheet 6-3 Instructions. Coverdell ESA—Taxable Distributions and Basis
Worksheet 6-3. coverdell esa—taxable distributions and basis, 7. qualified tuition program (qtp).
QTPs are also called 529 plans. States may establish and maintain programs that allow you to either prepay or contribute to an account for paying a student's qualified education expenses at an eligible educational institution. Eligible educational institutions may establish and maintain programs that allow you to prepay a student's qualified education expenses. If you prepay tuition, the student (designated beneficiary) will be entitled to a waiver or a payment of qualified education expenses. You can't deduct either payments or contributions to a QTP. For information on a specific QTP, you will need to contact the state agency or eligible educational institution that established and maintains it.
No tax is due on a distribution from a QTP unless the amount distributed is greater than the beneficiary's adjusted qualified education expenses (AQEE). See Are Distributions Taxable , later, for more information.
What Is a QTP?
A QTP is a program set up to allow you to either prepay or contribute to an account established for paying a student's qualified education expenses at an eligible educational institution. QTPs can be established and maintained by states (or agencies or instrumentalities of a state) and eligible educational institutions. The program must meet certain requirements. Your state government or the eligible educational institution in which you are interested can tell you whether or not they participate in a QTP.
Generally, these are expenses required for the enrollment or attendance of the designated beneficiary at an eligible educational institution. For purposes of QTPs, the expenses can be either qualified higher education expenses or qualified elementary and secondary education expenses.
The designated beneficiary is generally the student (or future student) for whom the QTP is intended to provide benefits. The designated beneficiary can be changed after participation in the QTP begins. If a state or local government or certain tax-exempt organizations purchase an interest in a QTP as part of a scholarship program, the designated beneficiary is the person who receives the interest as a scholarship.
For purposes of a QTP, an eligible educational institution can be either an eligible postsecondary school or an eligible elementary or secondary school.
An eligible postsecondary school is generally any accredited public, nonprofit, or proprietary (privately owned profit-making) college, university, vocational school, or other postsecondary educational institution. Also, the institution must be eligible to participate in a student aid program administered by the U.S. Department of Education. Virtually all accredited postsecondary institutions meet this definition. The educational institution should be able to tell you if it’s an eligible educational institution.
These are expenses related to enrollment or attendance at an eligible postsecondary school. As shown in the following list, to be qualified, some of the expenses must be required by the school and some must be incurred by students who are enrolled at least half-time, defined later.
Expenses for room and board must be incurred by students who are enrolled at least half-time (defined later).
You may need to contact the eligible educational institution for qualified room and board costs.
The purchase of computer or peripheral equipment, computer software, or Internet access and related services, if it's to be used primarily by the beneficiary during any of the years the beneficiary is enrolled at an eligible postsecondary school. (This doesn't include expenses for computer software for sports, games, or hobbies unless the software is predominantly educational in nature.)
The expenses for fees, books, supplies, and equipment required for the designated beneficiary’s participation in an apprenticeship program registered and certified with the Secretary of Labor under section 1 of the National Apprenticeship Act.
No more than $10,000 paid as principal or interest on qualified student loans of the designated beneficiary or the designated beneficiary’s sibling. A sibling includes a brother, sister, stepbrother, or stepsister. For purposes of the $10,000 limitation, amounts treated as a qualified higher education expense for the loans of a sibling are taken into account for the sibling and not for the designated beneficiary. You can’t deduct as interest on a student loan (see chapter 4 ) any amount paid from a distribution of earnings from a QTP after 2018 to the extent the earnings are treated as tax free because they were used to pay student loan interest.
A student is enrolled “at least half-time” if the student is enrolled for at least half the full-time academic workload for the course of study the student is pursuing, as determined under the standards of the school where the student is enrolled.
These are expenses for no more than $10,000 of tuition, incurred by a designated beneficiary, in connection with enrollment or attendance at an eligible elementary or secondary school.
Contributions to a QTP on behalf of any beneficiary can't be more than the amount necessary to provide for the qualified education expenses of the beneficiary. There are no income restrictions on the individual contributors.
You can contribute to both a QTP and a Coverdell education savings account (ESA) in the same year for the same designated beneficiary.
If a student receives a refund of qualified education expenses that were treated as paid by a QTP distribution, the student can recontribute these amounts into any QTP for which they are the beneficiary within 60 days after the date of the refund to avoid the need to figure the taxable part of the QTP distribution.
Are Distributions Taxable?
The part of a distribution representing the amount paid or contributed to a QTP doesn't have to be included in income. This is a return of the investment in the plan.
The designated beneficiary generally doesn't have to include in income any earnings distributed from a QTP if the total distribution is less than or equal to AQEE (defined under Figuring the Taxable Portion of a Distribution , later).
You will receive a Form 1099-Q from each of the programs from which you received a QTP distribution in 2022. The amount of your gross distribution (box 1) shown on each form will be divided between your earnings (box 2) and your basis, or return of investment (box 3). Form 1099-Q should be sent to you by January 31, 2023.
To determine if total distributions for the year are more or less than the amount of qualified education expenses, you must compare the total of all QTP distributions for the tax year to the AQEE.
This amount is the total qualified education expenses reduced by any tax-free educational assistance. Tax-free educational assistance includes:
Use the following steps to figure the taxable part.
Multiply the total distributed earnings shown in box 2 of Form 1099-Q by a fraction. The numerator (top part) is the AQEE paid during the year, and the denominator (bottom part) is the total amount distributed during the year.
Subtract the amount figured in (1) from the total distributed earnings. The result is the amount the beneficiary must include in income. Report it on Schedule 1 (Form 1040), line 8z.
In 2014, a young student’s parents opened a savings account for them with a QTP maintained by their state government. Over the years, the parents contributed $18,000 to the account. The total balance in the account was $27,000 on the date the distribution was made. In the summer of 2022, the student enrolled in college and had $8,300 of qualified education expenses for the rest of the year. The college expenses were paid from the following sources.
Before the student can determine the taxable part of their QTP distribution, they must reduce their total qualified education expenses by any tax-free educational assistance.
The student’s Form 1099-Q shows that $950 of the QTP distribution is earnings. They figure the taxable part of the distributed earnings as follows.
An American opportunity or lifetime learning credit (education credit) can be claimed in the same year the beneficiary takes a tax-free distribution from a QTP, as long as the same expenses aren't used for both benefits. This means that after the beneficiary reduces qualified education expenses by tax-free educational assistance, the beneficiary must further reduce them by the expenses taken into account in determining the credit.
Assume the same facts as in Example 1 , except that the parents claimed an American opportunity credit of $2,500 (based on $4,000 expenses).
If a designated beneficiary receives distributions from both a QTP and a Coverdell ESA in the same year, and the total of these distributions is more than the beneficiary's AQEE, the expenses must be allocated between the distributions.
Assume the same facts as in Example 2 , except that instead of receiving a $5,300 distribution from their QTP, the student received $4,600 from that account and $700 from their Coverdell ESA. In this case, the student must allocate their $1,200 of AQEE between the two distributions.
The student then figures the taxable portion of their Coverdell ESA distribution based on qualified education expenses of $158, and the taxable portion of their QTP distribution based on the other $1,042.
If you are required to allocate your expenses between Coverdell ESA and QTP distributions, and you have adjusted qualified elementary and secondary education expenses, see the examples in chapter 6 under Coordination With Qualified Tuition Program (QTP) Distributions .
For tax years beginning after 2017 and before 2026, if you have a loss on your investment in a QTP account, you can’t claim the loss on your income tax return. You have a loss only when all amounts from that account have been distributed and the total distributions are less than your unrecovered basis. Your basis is the total amount of contributions to that QTP account.
This exception only applies to the extent the distribution isn't more than the scholarship, allowance, or payment.
Made on account of the attendance of the designated beneficiary at a U.S. military academy (such as the USNA at Annapolis). This exception applies only to the extent that the amount of the distribution doesn't exceed the costs of advanced education (as defined in section 2005(d)(3) of title 10 of the U.S. Code) attributable to such attendance.
Assets can be rolled over or transferred from one QTP to another or from a QTP to an ABLE account. In addition, the designated beneficiary can be changed without transferring accounts.
Any amount distributed from a QTP isn't taxable if it's rolled over to either:
Another QTP for the benefit of the same beneficiary or for the benefit of a member of the beneficiary's family (including the beneficiary's spouse), or
An ABLE account for the benefit of the same beneficiary or for the benefit of a member of the beneficiary’s family (including the beneficiary’s spouse). But this doesn’t apply to the extent the amount distributed when added to other amounts contributed to the ABLE account exceeds the annual contribution limit. For more information about ABLE accounts, see Pub. 907, Tax Highlights for Persons With Disabilities.
An amount is rolled over if it's paid to an ABLE account or another QTP within 60 days after the date of the distribution.
When you graduated from college in January last year, you had $5,000 left in your QTP. You wanted to give this money to your younger sibling, who was in junior high school. In order to avoid paying tax on the distribution of the amount remaining in your account, you contributed the same amount to your sibling's QTP within 60 days of the distribution.
There are no income tax consequences if the designated beneficiary of an account is changed to a member of the beneficiary's family. See Members of the beneficiary's family , earlier.
Assume the same situation as in the last example. Instead of closing your QTP and paying the distribution into your sibling's QTP, you could have instructed the trustee of your account to simply change the name of the beneficiary on the account to that of your sibling.
8. Education Exception to Additional Tax on Early IRA Distributions
Generally, if you take a distribution from your IRA before you reach age 59½, you must pay a 10% additional tax on the early distribution. This applies to any IRA you own, whether it is a traditional IRA (including a SEP-IRA), a Roth IRA, or a SIMPLE IRA. The additional tax on an early distribution from a SIMPLE IRA may be as high as 25%. See Pub. 560, Retirement Plans for Small Business, for information on SEP-IRAs, and Pub. 590-B for information about distributions from all other IRAs.
However, you can take distributions from your IRAs for qualified higher education expenses without having to pay the 10% additional tax. You may owe income tax on at least part of the amount distributed, but you may not have to pay the 10% additional tax.
Generally, if the taxable part of the distribution is less than or equal to the adjusted qualified education expenses (AQEE), none of the distribution is subject to the additional tax. If the taxable part of the distribution is more than the AQEE, only the excess is subject to the additional tax.
Who Is Eligible? Individual retirement arrangements (IRAs)Early distributions from IRAs
You can take a distribution from your IRA before you reach age 59½ and not have to pay the 10% additional tax if, for the year of the distribution, you pay qualified education expenses for:
Your or your spouse's child, foster child, or adopted child; or
Your or your spouse’s grandchild.
For purposes of the 10% additional tax, these expenses are tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution. They also include expenses for special needs services incurred by or for special needs students in connection with their enrollment or attendance.
In addition, if the student is at least a half-time student, room and board are qualified education expenses.
The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student.
The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution.
An eligible educational institution is generally any accredited public, nonprofit, or proprietary (privately owned profit-making) college, university, vocational school, or other postsecondary educational institution. Also, the institution must be eligible to participate in a student aid program administered by the U.S. Department of Education. Virtually all accredited postsecondary institutions meet this definition. The educational institution should be able to tell you if it is an eligible educational institution.
A student is enrolled “at least half-time” if the student is enrolled for at least half the full-time academic workload for the course of study the student is pursuing as determined under the standards of the school where the student is enrolled.
To determine the amount of your distribution that isn't subject to the 10% additional tax, first figure your AQEE. You do this by reducing your total qualified education expenses by any tax-free educational assistance, which includes:
Expenses used to figure the tax-free portion of distributions from a Coverdell education savings account (ESA) (see Distributions in chapter 6 );
An inheritance given to either the student or the individual making the withdrawal; or
A withdrawal from personal savings (including savings from a qualified tuition program (QTP)).
If your IRA distribution is equal to or less than your AQEE, you aren't subject to the 10% additional tax.
In 2022, a teacher (age 32) took a year off from teaching to attend graduate school full-time. They paid $5,800 of qualified education expenses from the following sources.
Before the teacher can determine if they must pay the 10% additional tax on their IRA distribution, they must reduce their total qualified education expenses.
Assume the same facts as in Example 1 , except that the teacher deducted some of the contributions to their IRA, so the taxable part of their early distribution is $1,000. This must be included in their income subject to income tax.
The taxable part of the teacher's IRA distribution ($1,000) is larger than their $800 AQEE. Therefore, they must pay the 10% additional tax on $200, the taxable part of their distribution ($1,000) that is more than their AQEE ($800). The teacher doesn't have to pay the 10% additional tax on the remaining $800 of their taxable distribution.
By January 31, 2023, the payer of your IRA distribution should send you Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. The information on this form will help you determine how much of your distribution is taxable for income tax purposes and how much is subject to the 10% additional tax.
If you received an early distribution from your IRA, you must report the taxable part of the distribution on Form 1040, 1040-SR, or 1040-NR, line 4b. Then, if you qualify for an exception for qualified higher education expenses, you must file Form 5329 to show how much, if any, of your early distribution is subject to the 10% additional tax. See the instructions for Form 5329, Part I, for help in completing the form and entering the results on Schedule 2 (Form 1040), line 8.
There are many other situations in which Form 5329 is required. If, during 2022, you had other distributions from IRAs or qualified retirement plans, or have made excess contributions to certain tax-favored accounts, see the instructions for Schedule 2 (Form 1040), line 8, to determine if you must file Form 5329.
9. Education Savings Bond Program
Modified adjusted gross income (MAGI) limits. For 2022, the amount of your education savings bond interest exclusion is gradually reduced (phased out) if your MAGI is between $85,800 and $100,800 ($128,650 and $158,650 if you file a joint return). You can't exclude any of the interest if your MAGI is $100,800 or more ($158,650 or more if you file a joint return).
Generally, you must pay tax on the interest earned on U.S. savings bonds. If you don't include the interest in income in the years it is earned, you must include it in your income in the year in which you cash in the bonds.
However, when you cash in certain savings bonds under an education savings bond program, you may be able to exclude the interest from income.
Who Can Cash in Bonds Tax Free?
You may be able to cash in qualified U.S. savings bonds without having to include in your income some or all of the interest earned on the bonds if you meet the following conditions.
You pay qualified education expenses for yourself, your spouse, or a dependent.
Your MAGI is less than $100,800 ($158,650 if married filing jointly).
Your filing status isn't married filing separately.
A qualified U.S. savings bond is a series EE bond issued after 1989 or a series I bond. The bond must be issued either in your name (as the sole owner) or in the name of both you and your spouse (as co-owners).
The owner must be at least 24 years old before the bond's issue date. The issue date is printed on the front of the savings bond.
These include the following items you pay for either yourself, your spouse, or a dependent.
Tuition and fees required to enroll at or attend an eligible educational institution. Qualified education expenses don't include expenses for room and board or for courses involving sports, games, or hobbies that aren't part of a degree or certificate-granting program.
Contributions to a qualified tuition program (QTP) (see How Much Can You Contribute in chapter 7 ).
Contributions to a Coverdell education savings account (ESA) (see Contributions in chapter 6 ).
You must reduce your qualified education expenses by all of the following tax-free benefits.
Tax-free part of scholarships and fellowship grants (see Tax-Free Scholarships and Fellowship Grants in chapter 1 ).
Expenses used to figure the tax-free portion of distributions from a Coverdell ESA (see Qualified Education Expenses in chapter 6 ).
Expenses used to figure the tax-free portion of distributions from a QTP (see Qualified Education Expenses in chapter 7 ).
Any tax-free payments (other than gifts or inheritances) received as educational assistance, such as:
Veterans' educational assistance benefits (see Veterans' Benefits in chapter 1 );
Qualified tuition reductions (see Qualified Tuition Reduction in chapter 1 ); or
Employer-provided educational assistance (see chapter 10 ).
Any expenses used in figuring the American opportunity and lifetime learning credits. See What Expenses Qualify in chapter 2 (American opportunity credit) , and What Expenses Qualify in chapter 3 (lifetime learning credit) , for more information.
An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education. It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. The educational institution should be able to tell you if it is an eligible educational institution.
A person who qualifies as your dependent will be listed by name in the Dependents section of your Form 1040 or 1040-SR. See the Instructions for Form 1040.
For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return without taking into account this interest exclusion. However, as discussed below, there may be other modifications.
Your MAGI is the AGI on line 11 of Form 1040 or 1040-SR figured without taking into account any savings bond interest exclusion and modified by adding back any:
Exclusion of income by bona fide residents of American Samoa,
Exclusion of income by bona fide residents of Puerto Rico,
Exclusion for adoption benefits received under an employer's adoption assistance program, and
Deduction for student loan interest.
Use the worksheet in the instructions for line 9 of Form 8815 to figure your MAGI. If you claim any of the exclusion or deduction items (1)–(6) listed above, add the amount of the exclusion or deduction to the amount on line 5 of the worksheet. Don't add in the deduction for (7) student loan interest, because line 4 of the worksheet already includes this amount. Enter the total on Form 8815, line 9, as your MAGI.
Figuring the Tax-Free Amount
If the total you receive when you cash in the bonds isn't more than the AQEE for the year, all of the interest on the bonds may be tax free. However, if the total you receive when you cash in the bonds is more than the adjusted expenses, only part of the interest may be tax free.
To determine the tax-free amount, multiply the interest part of the proceeds by a fraction. The numerator (top part) of the fraction is the AQEE you paid during the year. The denominator (bottom part) of the fraction is the total proceeds you received during the year.
In February 2022, a married couple cashed a qualified series EE U.S. savings bond. They received proceeds of $9,000, representing principal of $6,000 and interest of $3,000. In 2022, they paid $7,650 of their child's college tuition. They aren't claiming an American opportunity or lifetime learning credit for those expenses, and their child doesn't have any tax-free educational assistance. Their MAGI for 2022 was $80,000.
They can exclude $2,550 of interest in 2022. They must pay tax on the remaining $450 ($3,000 − $2,550) of interest.
The amount of your interest exclusion is gradually reduced (phased out) if your MAGI is between $85,800 and $100,800 (between $128,650 and $158,650 if your filing status is married filing jointly). You can’t exclude any of the interest if your MAGI is equal to or more than the upper limit.
The phaseout, if any, is figured for you when you fill out Form 8815.
Use Form 8815 to figure your education savings bond interest exclusion. Enter your exclusion on line 3 of Schedule B (Form 1040), Interest and Ordinary Dividends. Attach Form 8815 to your tax return.
10. Employer-Provided Educational Assistance
Educational assistance benefits. Employer-provided educational assistance benefits include payments made after March 27, 2020, and before January 1, 2026, for principal or interest on any qualified education loan you incurred for your education. See Educational assistance benefits .
If you receive educational assistance benefits from your employer under an educational assistance program, you can exclude up to $5,250 of those benefits each year. This means your employer shouldn’t include those benefits with your wages, tips, and other compensation shown in box 1 of your Form W-2. This also means that you don’t have to include the benefits on your income tax return.
To qualify as an educational assistance program, the plan must be written and must meet certain other requirements. Your employer can tell you whether there is a qualified program where you work.
Tax-free educational assistance benefits include payments for tuition, fees and similar expenses, books, supplies, and equipment. Education generally includes any form of instruction or training that improves or develops your capabilities. The payments don't have to be for work-related courses or courses that are part of a degree program.
Tax-free educational assistance benefits also include payments made after March 27, 2020, and before January 1, 2026, whether paid to the employee or to a lender, of principal or interest on any qualified education loan (defined later) incurred by the employee for education of the employee.
Educational assistance benefits don't include payments for the following items.
Meals, lodging, or transportation.
Tools or supplies (other than textbooks) that you can keep after completing the course of instruction.
Courses involving sports, games, or hobbies unless they:
Have a reasonable relationship to the business of your employer, or
Are required as part of a degree program.
A qualified education loan is generally the same as a qualified student loan. See Qualified Student Loan in chapter 4. However, as discussed earlier, the loan must be incurred by the employee for education of the employee.
If your employer pays more than $5,250 in educational assistance benefits for you during the year, you must generally pay tax on the amount over $5,250. Your employer should include in your wages (box 1 of Form W-2) the amount that you must include in income.
However, if the benefits over $5,250 also qualify as a working condition fringe benefit, your employer doesn't have to include them in your wages. A working condition fringe benefit is a benefit that, had you paid for it, would be allowable as a business expense deduction. For more information on working condition fringe benefits, see Working Condition Benefits in chapter 2 of Pub. 15-B, Employer's Tax Guide to Fringe Benefits.
11. Business Deduction for Work-Related Education
Standard mileage rate. Generally, if you claim a business deduction for work-related education and you drive your car to and from school, the amount you can deduct for miles driven from January 1, 2022, through June 30, 2022, is 58.5 cents a mile. The amount you can deduct for miles driven from July 1, 2022, through December 31, 2022, is 62.5 cents a mile. For more information, see Transportation Expenses under What Expenses Can Be Deducted .
Miscellaneous itemized deductions. For tax years beginning after 2017 and before 2026, you no longer deduct work-related education expenses as a miscellaneous itemized deduction subject to a 2%-of-adjusted-gross-income floor.
This chapter discusses work-related education expenses you may be able to deduct as business expenses.
To claim such a deduction, you must:
File Schedule C (Form 1040), Profit or Loss From Business, or Schedule F (Form 1040), Profit or Loss From Farming, if you are self-employed;
File Form 2106, Employee Business Expenses, if you are an Armed Forces reservist, a qualified performing artist, a fee-based state or local government official, or an individual with a disability claiming impairment-related education expenses;
Itemize your deductions on Schedule A (Form 1040) or Schedule A (Form 1040-NR), if you are an individual with a disability claiming impairment-related education expenses; and
Have expenses for education that meet the requirements discussed under Qualifying Work-Related Education , later.
If you are self-employed, you deduct your expenses for qualifying work-related education directly from your self-employment income. This reduces the amount of your income subject to both income tax and self-employment tax.
If you are an Armed Forces reservist, qualified performing artist, or a fee-based state or local government official, you deduct your expenses for qualifying work-related education directly from your income as you figure your adjusted gross income.
If you are an individual with a disability and can itemize your deductions, you deduct your impairment-related education expenses as an itemized deduction. An itemized deduction reduces the amount of your income subject to tax.
Your work-related education expenses may also qualify you for other tax benefits, such as the American opportunity (see chapter 2 ) and lifetime learning (see chapter 3 ) credits. You may qualify for these other benefits even if you don't meet the requirements listed above.
Also, your work-related education expenses may qualify you to claim more than one tax benefit. Generally, you may claim any number of benefits as long as you use different expenses to figure each one.
Qualifying Work-Related Education
As discussed earlier, self-employed individuals, Armed Forces reservists, certain artists, and certain government officials can deduct the costs of qualifying work-related education as business expenses. Individuals with a disability can deduct impairment expenses related to this education as an itemized deduction. This is education that meets at least one of the following two tests.
The education is required by your employer or the law to keep your present salary, status, or job. The required education must serve a bona fide business purpose of your employer.
The education maintains or improves skills needed in your present work.
However, even if the education meets one or both of the above tests, it isn't qualifying work-related education if it:
Is needed to meet the minimum educational requirements of your present trade or business, or
Is part of a program of study that will qualify you for a new trade or business.
You can deduct the costs of qualifying work-related education as a business expense even if the education could lead to a degree.
Use Figure 11-1 as a quick check to see if your education qualifies.
Once you have met the minimum educational requirements for your job, your employer or the law may require you to get more education. This additional education is qualifying work-related education if all three of the following requirements are met.
It is required for you to keep your present salary, status, or job.
The requirement serves a bona fide business purpose of your employer.
The education isn't part of a program that will qualify you for a new trade or business.
When you get more education than your employer or the law requires, the additional education can be qualifying work-related education only if it maintains or improves skills required in your present work. See Education To Maintain or Improve Skills , later.
You are a teacher who has satisfied the minimum requirements for teaching. Your employer requires you to take an additional college course each year to keep your teaching job. If the courses won't qualify you for a new trade or business, they are qualifying work-related education even if you eventually receive a master's degree and an increase in salary because of this extra education.
Figure 11-1. Does Your Work-Related Education Qualify?
Figure 11-1
Figure 11–1. Does Your Work-Related Education Qualify?
Summary: This flowchart is used to determine if expenses incurred for work-related education qualify for deduction.
This is the beginning of the flowchart.
Is the education required by your employer or the law to keep your present salary, status, or job?
Does the requirement serve a bona fide business requirement of your employer?
Does the education maintain or improve skills needed in your present work?
Is the education needed to meet the minimum educational requirements of your present trade or business?
Is the education part of a program of study that will qualify you for a new trade or business?
Your education isn't qualifying work-related education.
Your education is qualifying work-related education.
Education To Maintain or Improve Skills
If your education isn't required by your employer or the law, it can be qualifying work-related education only if it maintains or improves skills needed in your present work. This could include refresher courses, courses on current developments, and academic or vocational courses.
You repair televisions, radios, and stereo systems for XYZ Store. To keep up with the latest changes, you take special courses in radio and stereo service. These courses maintain and improve skills required in your work.
Education to maintain or improve skills needed in your present work isn't qualifying education if it will also qualify you for a new trade or business.
If you stop working for a year or less in order to get education to maintain or improve skills needed in your present work and then return to the same general type of work, your absence is considered temporary. Education that you get during a temporary absence is qualifying work-related education if it maintains or improves skills needed in your present work.
You quit your biology research job to become a full-time biology graduate student for 1 year. If you return to work in biology research after completing the courses, the education is related to your present work even if you don't go back to work with the same employer.
If you stop work for more than a year, your absence from your job is considered indefinite. Education during an indefinite absence, even if it maintains or improves skills needed in the work from which you are absent, is considered to qualify you for a new trade or business. Therefore, it isn't qualifying work-related education.
Education To Meet Minimum Requirements
Education you need to meet the minimum educational requirements for your present trade or business isn't qualifying work-related education. The minimum educational requirements are determined by:
Laws and regulations;
Standards of your profession, trade, or business; and
Your employer.
Once you have met the minimum educational requirements that were in effect when you were hired, you don't have to meet any new minimum educational requirements. This means that if the minimum requirements change after you were hired, any education you need to meet the new requirements can be qualifying education.
You are a full-time engineering student. Although you haven't received your degree or certification, you work part time as an engineer for a firm that will employ you as a full-time engineer after you finish college. Although your college engineering courses improve your skills in your present job, they are also needed to meet the minimum job requirements for a full-time engineer. The education isn't qualifying work-related education.
You are an accountant and you have met the minimum educational requirements of your employer. Your employer later changes the minimum educational requirements and requires you to take college courses to keep your job. These additional courses can be qualifying work-related education because you have already satisfied the minimum requirements that were in effect when you were hired.
Requirements for Teachers
States or school districts usually set the minimum educational requirements for teachers. The requirement is the college degree or the minimum number of college hours usually required of a person hired for that position.
If there are no requirements, you will have met the minimum educational requirements when you become a faculty member. The determination of whether you are a faculty member of an educational institution must be made on the basis of the particular practices of the institution. You will generally be considered a faculty member when one or more of the following occurs.
You have tenure.
Your years of service count toward obtaining tenure.
You have a vote in faculty decisions.
Your school makes contributions for you to a retirement plan other than social security or a similar program.
The law in your state requires beginning secondary school teachers to have a bachelor's degree, including 10 professional education courses. In addition, to keep the job, a teacher must complete a fifth year of training within 10 years from the date of hire. If the employing school certifies to the state Department of Education that qualified teachers can't be found, the school can hire persons with only 3 years of college. However, to keep their jobs, these teachers must get a bachelor's degree and the required professional education courses within 3 years.
Under these facts, the bachelor's degree, whether or not it includes the 10 professional education courses, is considered the minimum educational requirement for qualification as a teacher in your state.
If you have all the required education except the fifth year, you have met the minimum educational requirements. The fifth year of training is qualifying work-related education unless it is part of a program of study that will qualify you for a new trade or business.
Assume the same facts as in Example 1 , except that you have a bachelor's degree and only six professional education courses. The additional four education courses can be qualifying work-related education. Although you don't have all the required courses, you have already met the minimum educational requirements.
Assume the same facts as in Example 1 , except that you are hired with only 3 years of college. The courses you take that lead to a bachelor's degree (including those in education) aren't qualifying work-related education. They are needed to meet the minimum educational requirements for employment as a teacher.
You have a bachelor's degree and you work as a temporary instructor at a university. At the same time, you take graduate courses toward an advanced degree. The rules of the university state that you can become a faculty member only if you get a graduate degree. Also, you can keep your job as an instructor only as long as you show satisfactory progress toward getting this degree. You haven't met the minimum educational requirements to qualify you as a faculty member. The graduate courses aren't qualifying work-related education.
Once you have met the minimum educational requirements for teachers for your state, you are considered to have met the minimum educational requirements in all states. This is true even if you must get additional education to be certified in another state. Any additional education you need is qualifying work-related education. You have already met the minimum requirements for teaching. Teaching in another state isn't a new trade or business.
You hold a permanent teaching certificate in State A and are employed as a teacher in that state for several years. You move to State B and are promptly hired as a teacher. You are required, however, to complete certain prescribed courses to get a permanent teaching certificate in State B. These additional courses are qualifying work-related education because the teaching position in State B involves the same general kind of work for which you were qualified in State A.
Education That Qualifies You for a New Trade or Business
Education that is part of a program of study that will qualify you for a new trade or business isn't qualifying work-related education. This is true even if you don't plan to enter that trade or business.
If you are an employee, a change of duties that involves the same general kind of work isn't a new trade or business.
You are an accountant. Your employer requires you to get a law degree at your own expense. You register at a law school for the regular curriculum that leads to a law degree. Even if you don't intend to become a lawyer, the education isn't qualifying because the law degree will qualify you for a new trade or business.
You are a general practitioner of medicine. You take a 2-week course to review developments in several specialized fields of medicine. The course doesn't qualify you for a new profession. It is qualifying work-related education because it maintains or improves skills required in your present profession.
While working in the private practice of psychiatry, you enter a program to study and train at an accredited psychoanalytic institute. The program will lead to qualifying you to practice psychoanalysis. The psychoanalytic training doesn't qualify you for a new profession. It is qualifying work-related education because it maintains or improves skills required in your present profession.
Review courses to prepare for the bar examination or the certified public accountant (CPA) examination aren't qualifying work-related education. They are part of a program of study that can qualify you for a new profession.
All teaching and related duties are considered the same general kind of work. A change in duties in any of the following ways isn't considered a change to a new business.
Elementary school teacher to secondary school teacher.
Teacher of one subject, such as biology, to teacher of another subject, such as art.
Classroom teacher to guidance counselor.
Classroom teacher to school administrator.
What Expenses Can Be Deducted?
If your education meets the requirements described earlier under Qualifying Work-Related Education , you may be able to deduct your education expenses as business expenses. If you aren't self-employed, you can deduct business expenses only if you are an Armed Forces reservist, qualified performing artist, fee-based state or local government official, or, for impairment-related expenses, an individual with a disability.
You can't deduct expenses related to tax-exempt and excluded income.
The following education expenses can be deducted.
Tuition, books, supplies, lab fees, and similar items.
Certain transportation and travel costs.
Other education expenses, such as costs of research and typing when writing a paper as part of an educational program.
You can't deduct personal or capital expenses. For example, you can't deduct the dollar value of vacation time or annual leave you take to attend classes. This amount is a personal expense.
If you don't claim reimbursement that you are entitled to receive from your employer, you can't deduct the expenses that apply to that unclaimed reimbursement.
Your employer agrees to pay your education expenses if you file a voucher showing your expenses. You don't file a voucher and you don't get reimbursed. Because you didn't file a voucher, you can't deduct the expenses on your tax return.
Transportation Expenses
If your education qualifies, you can deduct local transportation costs of going directly from work to school. If you are regularly employed and go to school on a temporary basis, you can also deduct the costs of returning from school to home.
You go to school on a temporary basis if either of the following situations applies to you.
Your attendance at school is realistically expected to last 1 year or less and does indeed last for 1 year or less.
Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. Your attendance is temporary up to the date you determine it will last more than 1 year.
You don't go to school on a temporary basis if either of the following situations applies to you.
Your attendance at school is realistically expected to last more than 1 year. It doesn't matter how long you actually attend.
Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. Your attendance isn't temporary after the date you determine it will last more than 1 year.
Deductible Transportation Expenses
If you are regularly employed and go directly from home to school on a temporary basis, you can deduct the roundtrip costs of transportation between your home and school. This is true regardless of the location of the school, the distance traveled, or whether you attend school on nonwork days.
Transportation expenses include the actual costs of bus, subway, cab, or other fares, as well as the costs of using your car. Transportation expenses don't include amounts spent for travel, meals, or lodging while you are away from home overnight.
You regularly work in a nearby town, and go directly from work to home. You also attend school every work night for 3 months to take a course that improves your job skills. Since you are attending school on a temporary basis, you can deduct your daily roundtrip transportation expenses in going between home and school. This is true regardless of the distance traveled.
Assume the same facts as in Example 1 , except that on certain nights you go directly from work to school and then home. You can deduct your transportation expenses from your regular work site to school and then home.
Assume the same facts as in Example 1 , except that you attend the school for 9 months on Saturdays, nonwork days. Since you are attending school on a temporary basis, you can deduct your roundtrip transportation expenses in going between home and school.
Assume the same facts as in Example 1 , except that you attend classes twice a week for 15 months. Since your attendance in school isn't considered temporary, you can't deduct your transportation expenses in going between home and school. If you go directly from work to school, you can deduct the one-way transportation expenses of going from work to school. If you go from work to home to school and return home, your transportation expenses can't be more than if you had gone directly from work to school.
If you use your car (whether you own or lease it) for transportation to school, you can deduct your actual expenses or use the standard mileage rate to figure the amount you can deduct. The standard mileage rate for miles driven from January 1, 2022, through June 30, 2022, is 58.5 cents a mile. The standard mileage rate for miles driven from July 1, 2022, through December 31, 2022, is 62.5 cents a mile. Whichever method you use, you can also deduct parking fees and tolls. See Pub. 463, chapter 4, for information on deducting your actual expenses of using a car.
Travel Expenses
You can deduct expenses for travel, meals (see 50% limit on meals , later), and lodging if you travel overnight mainly to obtain qualifying work-related education.
Travel expenses for qualifying work-related education are treated the same as travel expenses for other employee business purposes. For more information, see chapter 1 of Pub. 463.
If your travel away from home is mainly personal, you can't deduct all of your expenses for travel, meals, and lodging. You can deduct only your expenses for lodging and meals (see 50% limit on meals , later) during the time you attend the qualified educational activities.
Whether a trip's purpose is mainly personal or educational depends upon the facts and circumstances. An important factor is the comparison of time spent on personal activities with time spent on educational activities. If you spend more time on personal activities, the trip is considered mainly educational only if you can show a substantial nonpersonal reason for traveling to a particular location.
You work in Newark, New Jersey. You traveled to Chicago to take a deductible 1-week course at the request of your employer. Your main reason for going to Chicago was to take the course.
While there, you took a sightseeing trip, entertained some friends, and took a side trip to Pleasantville for a day.
Since the trip was mainly for business, you can deduct your roundtrip airfare to Chicago. You can't deduct your transportation expenses of going to Pleasantville. You can deduct only the meals (see 50% limit on meals , later) and lodging connected with your educational activities.
You work in Boston. You went to a university in Michigan to take a course for work. The course is qualifying work-related education.
You took one course, which is one-fourth of a full course load of study. You spent the rest of the time on personal activities. Your reasons for taking the course in Michigan were all personal.
Your trip is mainly personal because three-fourths of your time is considered personal time. You can't deduct the cost of your roundtrip train ticket to Michigan. You can deduct one-fourth of the meals (see 50% limit on meals , later) and lodging costs for the time you attended the university.
You work in Nashville and recently traveled to California to take a 2-week seminar. The seminar is qualifying work-related education.
While there, you spent an extra 8 weeks on personal activities. The facts, including the extra 8-week stay, show that your main purpose was to take a vacation.
You can't deduct your roundtrip airfare or your meals and lodging for the 8 weeks. You can deduct only your expenses for meals (see 50% limit on meals , later) and lodging for the 2 weeks you attended the seminar.
Certain cruises and conventions offer seminars or courses as part of their itinerary. Even if the seminars or courses are work related, your deduction for travel may be limited. This applies to:
Travel by ocean liner, cruise ship, or other form of luxury water transportation; and
Conventions outside the North American area.
For a discussion of the limits on travel expense deductions that apply to cruises and conventions, see Luxury Water Travel and Conventions in chapter 1 of Pub. 463.
Generally, you can deduct only 50% of the cost of your meals while traveling away from home to obtain qualifying work-related education. However, you can deduct 100% of meals provided by a restaurant. This applies only to meals paid or incurred after December 31, 2020, and before January 1, 2023. If you were reimbursed for the meals, see How To Treat Reimbursements , later.
Qualified performing artists and fee-based state or local government officials must use Form 2106 to apply any limit.
You can't deduct the cost of travel as a form of education even if it is directly related to your duties in your work or business.
You are a French language teacher. While on sabbatical leave granted for travel, you traveled through France to improve your knowledge of the French language. You chose your itinerary and most of your activities to improve your French language skills. You can't deduct your travel expenses as education expenses. This is true even if you spent most of your time learning French by visiting French schools and families, attending movies or plays, and engaging in similar activities.
You can't do the following.
Deduct work-related education expenses as business expenses if you benefit from these expenses under any other provision of the law.
Deduct work-related education expenses paid with tax-free scholarship, grant, or employer-provided educational assistance.
Adjustments to Qualifying Work-Related Education Expenses
If you pay qualifying work-related education expenses with certain tax-free funds, you can't claim a deduction for those amounts. You must reduce the qualifying expenses by the amount of such expenses allocable to the tax-free educational assistance.
This includes:
Employer-provided educational assistance (see chapter 10 );
Don't reduce the qualifying work-related education expenses by amounts paid with funds the student receives as:
Also, don't reduce the qualifying work-related education expenses by any scholarship or fellowship grant reported as income on the student's return or any scholarship which, by its terms, can't be applied to qualifying work-related education expenses.
How To Treat Reimbursements
How you treat reimbursements depends on the arrangement you have with your employer.
There are two basic types of reimbursement arrangements—accountable plans and nonaccountable plans. You can tell the type of plan you are reimbursed under by the way the reimbursement is reported on your Form W-2.
The following rules about reimbursement arrangements also apply to expense allowances received from your employer.
Accountable Plans
To be an accountable plan, your employer's reimbursement arrangement must require you to meet all three of the following rules.
Your expenses must have a business connection. This means your expenses must be allowed under the rules for qualifying work-related education explained earlier.
You must adequately account to your employer for your expenses within a reasonable period of time.
You must return any reimbursement or allowance in excess of the expenses accounted for within a reasonable period of time.
If you are reimbursed under an accountable plan, your employer shouldn't include any reimbursement of income on your Form W-2, box 1.
Even though you are reimbursed under an accountable plan, some of your expenses may not meet all three rules for accountable plans. Those expenses that fail to meet the three rules are treated as having been reimbursed under a Nonaccountable Plan (discussed later).
Under an accountable plan, if your expenses equal your reimbursement, you don't complete Form 2106. Because your expenses and reimbursements are equal, you don't have unreimbursed work-related education expenses.
If your expenses are more than your reimbursement, you generally cannot deduct your excess expenses. See Deducting Business Expenses , later.
Because your excess meal expenses may be subject to the 50% limit, you must figure them separately from your other expenses. If your employer paid you a single amount to cover both meals and other expenses, you must allocate the reimbursement so that you can figure your excess meal expenses separately. Make the allocation as follows.
Divide your meal expenses by your total expenses.
Multiply your total reimbursement by the result from (1). This is the allocated reimbursement for your meal expenses.
Subtract the amount figured in (2) from your total reimbursement. The difference is the allocated reimbursement for your other expenses of qualifying work-related education.
You are a qualified performing artist and one of your employers paid you an expense allowance of $2,000 under an accountable plan. The allowance was to cover all of your expenses of traveling away from home to take a 2-week training course for work. There was no indication of how much of the reimbursement was for each type of expense. Your actual expenses equal $2,500 ($425 for meals + $700 lodging + $150 transportation expenses + $1,225 for books and tuition).
Using the steps listed above, allocate the reimbursement between the $425 meal expenses and the $2,075 other expenses.
Nonaccountable Plans
Your employer will combine the amount of any reimbursement or other expense allowance paid to you under a nonaccountable plan with your wages, salary, or other pay and report the total on your Form W-2, box 1.
You generally cannot deduct your expenses regardless of whether they are more than, less than, or equal to your reimbursement. See Deducting Business Expenses , later.
Reimbursements you received for nondeductible expenses are treated as paid under a nonaccountable plan. You must include them in your income. For example, you must include in your income reimbursements your employer gave you for expenses of education that:
You need to meet the minimum educational requirements for your job, or
Is part of a program of study that can qualify you for a new trade or business.
For more information on accountable and nonaccountable plans, see chapter 6 of Pub. 463.
Deducting Business Expenses
Self-employed persons and employees report their business expenses differently.
The following information explains what forms you must use to deduct the cost of your qualifying work-related education as a business expense.
If you are self-employed, you must report the cost of your qualifying work-related education on the appropriate form used to report your business income and expenses (generally, Schedule C (Form 1040), or Schedule F (Form 1040)). If your education expenses include expenses for a car or truck, travel, or meals, report those expenses the same way you report other business expenses for those items. See the instructions for the form you file for information on how to complete it.
If you are an Armed Forces reservist, a qualified performing artist, or a state (or local) government official who is paid in whole or in part on a fee basis, you can deduct the cost of your qualifying work-related education as an adjustment to gross income.
Include the cost of your qualifying work-related education with any other employee business expenses on Schedule 1 (Form 1040), line 12. You must complete Form 2106 to figure your deduction.
For more information on qualified performing artists, see chapter 6 of Pub. 463.
If you are an individual with a disability and have impairment-related work expenses that are necessary for you to be able to get qualifying work-related education, you can deduct these expenses on Schedule A (Form 1040), line 16, or Schedule A (Form 1040-NR), line 7. To deduct these expenses, you must complete Form 2106.
For more information on impairment-related work expenses, see chapter 6 of Pub. 463.
Recordkeeping
If you are an employee who is reimbursed for expenses and you give your records and documentation to your employer, you don't have to keep duplicate copies of this information. However, you should keep your records for a 3-year period if:
You claim deductions for expenses that are more than your reimbursement,
Your employer doesn't use adequate accounting procedures to verify expense accounts,
You are related to your employer, or
Your expenses are reimbursed under a nonaccountable plan.
If any of the above cases apply to you, you must be able to prove that your expenses are deductible. You should keep adequate records or have sufficient evidence that will support your expenses. Estimates or approximations don't qualify as proof of an expense. Some examples of what can be used to help prove your expenses are the following.
Documents, such as transcripts, course descriptions, catalogs, etc., showing periods of enrollment in educational institutions, principal subjects studied, and descriptions of educational activity.
Canceled checks and receipts to verify amounts you spent for:
Tuition and books,
Meals and lodging while away from home overnight for educational purposes,
Travel and transportation, and
Other education expenses.
Statements from your employer explaining whether the education was necessary for you to keep your job, salary, or status; how the education helped maintain or improve skills needed in your job; how much reimbursement you received; and, if you are a teacher, the type of certificate and subjects taught.
Complete information about any scholarship or fellowship grants, including amounts you received during the year.
12. How To Get Tax Help
If you have questions about a tax issue; need help preparing your tax return; or want to download free publications, forms, or instructions, go to IRS.gov to find resources that can help you right away.
After receiving all your wage and earnings statements (Forms W-2, W-2G, 1099-R, 1099-MISC, 1099-NEC, etc.); unemployment compensation statements (by mail or in a digital format) or other government payment statements (Form 1099-G); and interest, dividend, and retirement statements from banks and investment firms (Forms 1099), you have several options to choose from to prepare and file your tax return. You can prepare the tax return yourself, see if you qualify for free tax preparation, or hire a tax professional to prepare your return.
Go to IRS.gov to see your options for preparing and filing your return online or in your local community, if you qualify, which include the following.
Free File. This program lets you prepare and file your federal individual income tax return for free using brand-name tax-preparation-and-filing software or Free File fillable forms. However, state tax preparation may not be available through Free File. Go to IRS.gov/FreeFile to see if you qualify for free online federal tax preparation, e-filing, and direct deposit or payment options.
VITA. The Volunteer Income Tax Assistance (VITA) program offers free tax help to people with low-to-moderate incomes, persons with disabilities, and limited-English-speaking taxpayers who need help preparing their own tax returns. Go to IRS.gov/VITA , download the free IRS2Go app, or call 800-906-9887 for information on free tax return preparation.
TCE. The Tax Counseling for the Elderly (TCE) program offers free tax help for all taxpayers, particularly those who are 60 years of age and older. TCE volunteers specialize in answering questions about pensions and retirement-related issues unique to seniors. Go to IRS.gov/TCE , download the free IRS2Go app, or call 888-227-7669 for information on free tax return preparation.
MilTax. Members of the U.S. Armed Forces and qualified veterans may use MilTax, a free tax service offered by the Department of Defense through Military OneSource. For more information, go to MilitaryOneSource ( MilitaryOneSource.mil/MilTax
Also, the IRS offers Free Fillable Forms, which can be completed online and then filed electronically regardless of income.
Go to IRS.gov/Tools for the following.
The Earned Income Tax Credit Assistant ( IRS.gov/EITCAssistant ) determines if you’re eligible for the earned income credit (EIC).
The Online EIN Application ( IRS.gov/EIN ) helps you get an employer identification number (EIN) at no cost.
The Tax Withholding Estimator ( IRS.gov/W4app ) makes it easier for you to estimate the federal income tax you want your employer to withhold from your paycheck. This is tax withholding. See how your withholding affects your refund, take-home pay, or tax due.
The First-Time Homebuyer Credit Account Look-up ( IRS.gov/HomeBuyer ) tool provides information on your repayments and account balance.
The Sales Tax Deduction Calculator ( IRS.gov/SalesTax ) figures the amount you can claim if you itemize deductions on Schedule A (Form 1040).
IRS.gov/Help : A variety of tools to help you get answers to some of the most common tax questions.
IRS.gov/ITA : The Interactive Tax Assistant, a tool that will ask you questions and, based on your input, provide answers on a number of tax law topics.
IRS.gov/Forms : Find forms, instructions, and publications. You will find details on the most recent tax changes and interactive links to help you find answers to your questions.
There are various types of tax return preparers, including enrolled agents, certified public accountants (CPAs), accountants, and many others who don’t have professional credentials. If you choose to have someone prepare your tax return, choose that preparer wisely. A paid tax preparer is:
Primarily responsible for the overall substantive accuracy of your return,
Required to sign the return, and
Required to include their preparer tax identification number (PTIN).
Although the tax preparer always signs the return, you're ultimately responsible for providing all the information required for the preparer to accurately prepare your return. Anyone paid to prepare tax returns for others should have a thorough understanding of tax matters. For more information on how to choose a tax preparer, go to Tips for Choosing a Tax Preparer on IRS.gov.
Go to IRS.gov/Coronavirus for links to information on the impact of the coronavirus, as well as tax relief available for individuals and families, small and large businesses, and tax-exempt organizations.
The Social Security Administration (SSA) offers online service at SSA.gov/employer for fast, free, and secure online W-2 filing options to CPAs, accountants, enrolled agents, and individuals who process Form W-2, Wage and Tax Statement, and Form W-2c, Corrected Wage and Tax Statement.
Go to IRS.gov/SocialMedia to see the various social media tools the IRS uses to share the latest information on tax changes, scam alerts, initiatives, products, and services. At the IRS, privacy and security are our highest priority. We use these tools to share public information with you. Don’t post your social security number (SSN) or other confidential information on social media sites. Always protect your identity when using any social networking site.
The following IRS YouTube channels provide short, informative videos on various tax-related topics in English, Spanish, and ASL.
Youtube.com/irsvideos .
Youtube.com/irsvideosmultilingua .
Youtube.com/irsvideosASL .
The IRS Video portal ( IRSVideos.gov ) contains video and audio presentations for individuals, small businesses, and tax professionals.
You can find information on IRS.gov/MyLanguage if English isn’t your native language.
The IRS is committed to serving our multilingual customers by offering OPI services. The OPI Service is a federally funded program and is available at Taxpayer Assistance Centers (TACs), other IRS offices, and every VITA/TCE return site. The OPI Service is accessible in more than 350 languages.
Taxpayers who need information about accessibility services can call 833-690-0598. The Accessibility Helpline can answer questions related to current and future accessibility products and services available in alternative media formats (for example, braille, large print, audio, etc.). The Accessibility Helpline does not have access to your IRS account. For help with tax law, refunds, or account-related issues, go to IRS.gov/LetUsHelp .
Form 9000, Alternative Media Preference, or Form 9000(SP) allows you to elect to receive certain types of written correspondence in the following formats.
Standard Print.
Large Print.
Audio (MP3).
Plain Text File (TXT).
Braille Ready File (BRF).
Go to Disaster Assistance and Emergency Relief for Individuals and Businesses to review the available disaster tax relief.
Go to IRS.gov/Forms to view, download, or print all the forms and publications you may need. Or you can go to IRS.gov/OrderForms to place an order.
You can also download and view popular tax publications and instructions (including the Instructions for Form 1040) on mobile devices as eBooks at IRS.gov/eBooks .
IRS eBooks have been tested using Apple's iBooks for iPad. Our eBooks haven’t been tested on other dedicated eBook readers, and eBook functionality may not operate as intended.
Go to IRS.gov/Account to securely access information about your federal tax account.
View the amount you owe and a breakdown by tax year.
See payment plan details or apply for a new payment plan.
Make a payment or view 5 years of payment history and any pending or scheduled payments.
Access your tax records, including key data from your most recent tax return, your EIP amounts, and transcripts.
View digital copies of select notices from the IRS.
Approve or reject authorization requests from tax professionals.
View your address on file or manage your communication preferences.
This tool lets your tax professional submit an authorization request to access your individual taxpayer IRS online account . For more information, go to IRS.gov/TaxProAccount .
The fastest way to receive a tax refund is to file electronically and choose direct deposit, which securely and electronically transfers your refund directly into your financial account. Direct deposit also avoids the possibility that your check could be lost, stolen, destroyed, or returned undeliverable to the IRS. Eight in 10 taxpayers use direct deposit to receive their refund. If you don’t have a bank account, go to IRS.gov/DirectDeposit for more information on where to find a bank or credit union that can open an account online.
The quickest way to get a copy of your tax transcript is to go to IRS.gov/Transcripts . Click on either “Get Transcript Online” or “Get Transcript by Mail” to order a copy of your transcript. If you prefer, you can order your transcript by calling 800-908-9946.
Tax-related identity theft happens when someone steals your personal information to commit tax fraud. Your taxes can be affected if your SSN is used to file a fraudulent return or to claim a refund or credit.
The IRS doesn’t initiate contact with taxpayers by email, text messages (including shortened links), telephone calls, or social media channels to request or verify personal or financial information. This includes requests for personal identification numbers (PINs), passwords, or similar information for credit cards, banks, or other financial accounts.
Go to IRS.gov/IdentityTheft , the IRS Identity Theft Central webpage, for information on identity theft and data security protection for taxpayers, tax professionals, and businesses. If your SSN has been lost or stolen or you suspect you’re a victim of tax-related identity theft, you can learn what steps you should take.
Get an Identity Protection PIN (IP PIN). IP PINs are six-digit numbers assigned to taxpayers to help prevent the misuse of their SSNs on fraudulent federal income tax returns. When you have an IP PIN, it prevents someone else from filing a tax return with your SSN. To learn more, go to IRS.gov/IPPIN .
Go to IRS.gov/Refunds .
Download the official IRS2Go app to your mobile device to check your refund status.
Call the automated refund hotline at 800-829-1954.
The IRS can’t issue refunds before mid-February for returns that claimed the EIC or the additional child tax credit (ACTC). This applies to the entire refund, not just the portion associated with these credits.
Go to IRS.gov/Payments for information on how to make a payment using any of the following options.
IRS Direct Pay : Pay your individual tax bill or estimated tax payment directly from your checking or savings account at no cost to you.
Debit or Credit Card : Choose an approved payment processor to pay online or by phone.
Electronic Funds Withdrawal : Schedule a payment when filing your federal taxes using tax return preparation software or through a tax professional.
Electronic Federal Tax Payment System : Best option for businesses. Enrollment is required.
Check or Money Order : Mail your payment to the address listed on the notice or instructions.
Cash : You may be able to pay your taxes with cash at a participating retail store.
Same-Day Wire : You may be able to do same-day wire from your financial institution. Contact your financial institution for availability, cost, and time frames.
The IRS uses the latest encryption technology to ensure that the electronic payments you make online, by phone, or from a mobile device using the IRS2Go app are safe and secure. Paying electronically is quick, easy, and faster than mailing in a check or money order.
Go to IRS.gov/Payments for more information about your options.
Apply for an online payment agreement ( IRS.gov/OPA ) to meet your tax obligation in monthly installments if you can’t pay your taxes in full today. Once you complete the online process, you will receive immediate notification of whether your agreement has been approved.
Use the Offer in Compromise Pre-Qualifier to see if you can settle your tax debt for less than the full amount you owe. For more information on the Offer in Compromise program, go to IRS.gov/OIC .
Go to IRS.gov/Form1040X for information and updates.
Go to IRS.gov/WMAR to track the status of Form 1040-X amended returns.
It can take up to 3 weeks from the date you filed your amended return for it to show up in our system, and processing it can take up to 16 weeks.
Go to IRS.gov/Notices to find additional information about responding to an IRS notice or letter.
You can use Schedule LEP (Form 1040), Request for Change in Language Preference, to state a preference to receive notices, letters, or other written communications from the IRS in an alternative language. You may not immediately receive written communications in the requested language. The IRS’s commitment to LEP taxpayers is part of a multi-year timeline that is scheduled to begin providing translations in 2023. You will continue to receive communications, including notices and letters in English until they are translated to your preferred language.
Keep in mind, many questions can be answered on IRS.gov without visiting an IRS TAC. Go to IRS.gov/LetUsHelp for the topics people ask about most. If you still need help, IRS TACs provide tax help when a tax issue can’t be handled online or by phone. All TACs now provide service by appointment, so you’ll know in advance that you can get the service you need without long wait times. Before you visit, go to IRS.gov/TACLocator to find the nearest TAC and to check hours, available services, and appointment options. Or, on the IRS2Go app, under the Stay Connected tab, choose the Contact Us option and click on “Local Offices.”
The Taxpayer Advocate Service (TAS) Is Here To Help You
What is tas.
TAS is an independent organization within the IRS that helps taxpayers and protects taxpayer rights. Their job is to ensure that every taxpayer is treated fairly and that you know and understand your rights under the Taxpayer Bill of Rights .
The Taxpayer Bill of Rights describes 10 basic rights that all taxpayers have when dealing with the IRS. Go to TaxpayerAdvocate.IRS.gov to help you understand what these rights mean to you and how they apply. These are your rights. Know them. Use them.
TAS can help you resolve problems that you can’t resolve with the IRS. And their service is free. If you qualify for their assistance, you will be assigned to one advocate who will work with you throughout the process and will do everything possible to resolve your issue. TAS can help you if:
Your problem is causing financial difficulty for you, your family, or your business;
You face (or your business is facing) an immediate threat of adverse action; or
You’ve tried repeatedly to contact the IRS but no one has responded, or the IRS hasn’t responded by the date promised.
TAS has offices in every state, the District of Columbia, and Puerto Rico . Your local advocate’s number is in your local directory and at TaxpayerAdvocate.IRS.gov/Contact-Us . You can also call them at 877-777-4778.
TAS works to resolve large-scale problems that affect many taxpayers. If you know of one of these broad issues, report it to them at IRS.gov/SAMS .
TAS can provide a variety of information for tax professionals, including tax law updates and guidance, TAS programs, and ways to let TAS know about systemic problems you’ve seen in your practice.
LITCs are independent from the IRS. LITCs represent individuals whose income is below a certain level and need to resolve tax problems with the IRS, such as audits, appeals, and tax collection disputes. In addition, LITCs can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Services are offered for free or a small fee for eligible taxpayers. To find an LITC near you, go to TaxpayerAdvocate.IRS.gov/about-us/Low-Income-Taxpayer-Clinics-LITC or see IRS Pub. 4134, Low Income Taxpayer Clinic List .
Publication 970 - Additional Material
The following appendix is provided to help you claim the education benefits that will give you the lowest tax. It consists of a chart summarizing some of the major differences between the education tax benefits discussed in this publication. It is intended only as a guide. Look in this publication for more complete information.
Highlights of Education Tax Benefits for Tax Year 2022
The education benefits included in this publication were enacted over many years, leading to a number of common terms being defined differently from one benefit to the next. For example, an eligible educational institution means one thing when determining if earnings from a Coverdell education savings account aren't taxable and something else when determining if a scholarship or fellowship grant isn't taxable.
For each term listed below that has more than one definition, the definition for each education benefit is listed.
A semester, trimester, quarter, or other period of study (such as a summer school session) as reasonably determined by an educational institution. If an educational institution uses credit hours or clock hours and doesn't have academic terms, each payment period can be treated as an academic period.
Qualified education expenses (defined later) reduced by any tax-free educational assistance, such as a tax-free scholarship or employer-provided educational assistance. They must also be reduced by any qualified education expenses deducted elsewhere on your return, used to determine an education credit or other benefit, or used to determine a tax-free distribution. For information on a specific benefit, see the appropriate chapter in this publication.
A student who meets either of the following requirements.
Attends a primary or secondary school or pursues a degree at a college or university.
Attends an accredited educational institution that is authorized to provide:
A program that is acceptable for full credit toward a bachelor's or higher degree, or
A program of training to prepare students for gainful employment in a recognized occupation.
The individual named in the document creating the account/plan who is to receive the benefit of the funds in the account/plan.
American opportunity credit. Any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education. It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions.
Coverdell education savings account (ESA). Any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education. It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Also included is any public, private, or religious school that provides elementary or secondary education (kindergarten through grade 12), as determined under state law.
Education savings bond program. Same as American opportunity credit in this category.
IRA, early distributions from. Same as American opportunity credit in this category.
Lifetime learning credit. Same as American opportunity credit in this category.
Qualified tuition program (QTP). Generally, same as Coverdell education savings account (ESA) in this category.
Scholarships and fellowship grants. An institution that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities.
Student loan, cancellation of. Same as Scholarships and fellowship grants in this category.
Student loan interest deduction. Any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education. It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Also included is an institution that conducts an internship or residency program leading to a degree or certificate from an institution of higher education, a hospital, or a health care facility that offers postgraduate training.
American opportunity credit. A student who meets all of the following requirements for the tax year for which the credit is being determined.
Didn't have expenses that were used to figure an American opportunity credit in any 4 earlier tax years.
Hadn't completed the first 4 years of postsecondary education (generally, the freshman through senior years) in an earlier tax year.
For at least one academic period beginning in the tax year, was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential at an eligible educational institution.
Was free of any federal or state felony conviction for possessing or distributing a controlled substance as of the end of the tax year.
Lifetime learning credit. A student who is enrolled in one or more courses at an eligible educational institution.
Student loan interest deduction. A student who was enrolled at least half-time in a program leading to a postsecondary degree, certificate, or other recognized educational credential at an eligible educational institution.
A student who is enrolled for at least half the full-time academic workload for the course of study the student is pursuing, as determined under the standards of the school where the student is enrolled.
American opportunity credit. Adjusted gross income (AGI) as figured on the federal income tax return, modified by adding back any:
Coverdell education savings account (ESA). Same as American opportunity credit in this category.
Education savings bond program. Adjusted gross income (AGI) as figured on the federal income tax return without taking into account any savings bond interest exclusion and modified by adding back any:
Student loan interest deduction. Adjusted gross income (AGI) as figured on the federal income tax return without taking into account any student loan interest deduction, and modified by adding back any:
The amount of credit or deduction allowed is reduced when the modified adjusted gross income (MAGI) is greater than a specified amount of income.
See the pertinent chapter for specific items.
American opportunity credit. Tuition and certain related expenses (including student activity fees) required for enrollment or attendance at an eligible educational institution. Books, supplies, and equipment needed for a course of study are included even if not purchased from the educational institution. Doesn't include expenses for room and board. Doesn't include expenses for courses involving sports, games, or hobbies (including noncredit courses) that aren't part of the student's postsecondary degree program.
Coverdell education savings account (ESA). Expenses related to or required for enrollment or attendance of the designated beneficiary at an eligible elementary, secondary, or postsecondary school. Includes computer or peripheral equipment, computer software, or Internet access and related services. Many specialized expenses included for K–12. Also includes expenses for special needs services and contributions to a qualified tuition program (QTP).
Education savings bond program. Tuition and fees required to enroll at or attend an eligible educational institution. Also includes contributions to a qualified tuition program (QTP) or Coverdell education savings account (ESA). Doesn't include expenses for room and board. Doesn't include expenses for courses involving sports, games, or hobbies that aren't part of a degree or certificate-granting program.
IRA, early distributions from. Tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution, plus certain limited costs of room and board for students who are enrolled at least half-time. Also includes expenses for special needs services incurred by or for special needs students in connection with their enrollment or attendance.
Lifetime learning credit. Tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. Student activity fees and expenses for course-related books, supplies, and equipment are included only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. Doesn't include expenses for room and board. Doesn't include expenses for courses involving sports, games, or hobbies (including noncredit courses) that aren't part of the student's postsecondary degree program, unless taken by the student to acquire or improve job skills.
Qualified tuition program (QTP). Tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible higher educational institution, plus certain limited costs of room and board for students who are enrolled at least half-time. Includes computer or peripheral equipment, computer software, or Internet access and related services. Also includes expenses for special needs services and computer access. Also, for amounts paid from distributions made after 2017, includes no more than $10,000 of elementary and secondary school (K–12) tuition incurred after 2017.
Scholarships and fellowship grants. Expenses for tuition and fees required to enroll at or attend an eligible educational institution, and course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. Course-related items must be required of all students in the course of instruction.
Student loan interest deduction. Total costs of attending an eligible educational institution, including graduate school (however, limitations may apply to the cost of room and board allowed).
To include as income on your current year's return an amount allowed as a deduction in a prior year. To include as tax on your current year's return an amount allowed as a credit in a prior year.
A tax-free distribution to you of cash or other assets from a tax-favored plan that you contribute to another tax-favored plan.
A movement of funds in a tax-favored plan from one trustee directly to another, either at your request or at the trustee's request.
New state loan available to help students complete degrees in high-demand fields
It could be a pivotal week for millions of Americans waiting for word on President Biden's student loan forgiveness plan.
The Texas Higher Education Coordinating Board is offering a new loan aimed at increasing the number of Texans who complete degree programs for high-demand occupations, such as nursing, teaching, energy and more.
The video above is about other ways to get debt relief as President Joe Biden's student loan forgiveness program remains blocked .
The Future Occupations & Reskilling Workforce Advancement to Reach Demand program provides "alternative educational loans" to students who cannot afford tuition and other expenses, according to the THECB. Students who receive the loan will ideally be able to pay it off within 10 years, a news release said.
In order to be eligible for the loan, students must be able to complete their higher education program in two years or less, according to the loan website. If enrolled in a degree program, a student must have completed at least half of their coursework before they receive the loan. If enrolled in a nondegree credential program, the program must last less than two years.
Students also must be enrolled in programs related to nursing/patient care, teaching, technology, transportation, logistics or energy. A full list of eligible programs is available here.
Only Texas residents are eligible for the FORWARD loan.
"The FORWARD loan program will help more Texans secure careers in high-demand fields and complete their degrees with manageable debt as they enter the workforce," Higher Education Commissioner Harrison Keller said in the release. "We are committed to increasing educational attainment for Texans of all ages, with the goal of 95% of all undergraduates completing their credentials with manageable or no debt."
Texans can apply for the FORWARD loan online . For more information about the program, visit the loan website or contact the THECB Borrower Services Department at 1-800-242-3062. Texans can also fill out this online contact form and select "Student Loan Question" as the contact reason.
This article comes from our ABC13 partners at Community Impact Newspapers .
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SoFi Bank sues to block Biden’s student loan payment pause
The Associated Press
March 6, 2023, 8:03 PM
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WASHINGTON (AP) — A private bank is trying to force the Biden administration to end its pause on federal student loan payments , arguing the moratorium has no legal basis and has cost the bank, known for its refinancing business, millions of dollars in profits.
In a federal lawsuit filed Friday in Washington, SoFi Bank N.A. asked a federal judge to overturn President Joe Biden’s latest extension of the payment pause. Student loan payments first were halted at the start of the pandemic by President Donald Trump’s administration. The pause has been extended eight times over three years.
The bank says its federal student loan refinancing business has suffered because borrowers have little incentive to refinance while payments and interest remain on hold . At a minimum, the lawsuit asks a judge to limit the pause only to borrowers who would be eligible for Biden’s cancellation plan.
Biden’s latest extension, which was announced in November and could stretch as far as this summer, is unlawful on “multiple grounds,” the lawsuit claims.
Unlike the first seven extensions, which were meant to help borrowers struggling as a result of the pandemic, the latest one was enacted solely in response to legal challenges to Biden’s plan for widespread student debt forgiveness, the lawsuit says. The plan is currently being challenged in the Supreme Court , which is expected to rule by June .
“The eighth extension does not even attempt to redress harm from the pandemic at all, but rather to alleviate ‘uncertainty’ caused by the debt-cancellation litigation,” SoFi says in the lawsuit.
SoFi argues that isn’t a valid reason authorized by the HEROES Act, the federal law the Biden administration has invoked to continue the pause. The bank also argues the extension violated the Administrative Procedure Act because the administration failed to invite feedback from the public.
The most recent extension has cost the bank at least $6 million in lost profits, SoFi says, and it could lead to a total of $30 million in losses if it continues through August.
“In essence, SoFi is being forced to compete with loans with 0% interest rates and for which any ongoing repayment of the principal is entirely optional,” the lawsuit says.
The Education Department defended the legality of the pause, calling the lawsuit “an attempt by a multi-billion dollar company to make money while they force 45 million borrowers back into repayment.”
“The department will continue to fight to deliver relief to borrowers, provide a smooth path to repayment and protect borrowers from industry and special interests,” the agency said in a statement.
The lawsuit drew swift condemnation from borrower advocates, who called it a money grab at the expense of those struggling with student debt .
“The real story here is the huge risk this poses to tens of millions of working people who SoFi would never lend to — families across the country that depend on the student loan payment pause to shield them from financial devastation,” said Mike Pierce, executive director of the Student Borrower Protection Center. ___
The Associated Press education team receives support from the Carnegie Corporation of New York. The AP is solely responsible for all content.
Copyright © 2023 The Associated Press. All rights reserved. This material may not be published, broadcast, written or redistributed.
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High school student restores 1954 John Deere tractor, wins money for college
LUBBOCK, Texas (KCBD/Gray News) - A high school senior in Texas is feeling confident about his life after graduation after he won big bucks for presenting a 1954 John Deere tractor he restored himself.
Frenship High School senior Cade Clark restored the tractor for AG Mechanics at the San Antonio Stock Show & Rodeo .
Clark won first place in his class, grand champion in his division, and reserve grand champion of all the tractors in San Antonio.
“I won two welders, two torches, a toolbox, two buckles and then the $10,000 scholarship,” Clark told KCBD .
He said the money would go towards college.
Clark said he didn’t do the restoration for the fame, the glory, or even the new welders. He did it for the smiles he knew he’d get when everyone saw the shiny new tractor.
“The people I bought it from, they were crying whenever it left on the trailer. I really wanted to make it nice for them,” Clark said. “Their son was helping me. I knew he really wanted to see it new.”
Clark worked 700 hours to make the tractor farm ready. He said that from the first time he started it, he knew he had done something special.
“It was like a sense of accomplishment,” Clark said.
Clark has been in Future Farmers of America for four years. He said he’s learned a lot about taking on challenges from the organization.
“It’s taught me responsibility and a lot of self-discipline,” Clark said.
Clark said those life skills will help him in his next steps. After he walks across the stage, he’s plowing into his degree in agriculture business and a future in farming.
But first, he has another stock show to focus on in Houston.
“I’m pretty confident,” Clark said. “There’s a couple of things I’ve got to do to it that the judges told me in San Antonio. Once I get those fixed I feel like I’ll do pretty well.”
Copyright 2023 KCBD via Gray Media Group, Inc. All rights reserved.
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Worksheets include: Lease Agreement Examples of Housing Discrimination 4. Practical Money Skill's Living On Your Own Suggested Age: 7-8 grade In Lesson 4, you'll find worksheets that guide students through listing the things they have in their bedrooms and estimating the cost of these items.
This Money Smart Classroom Bundle Is perfect for teaching your High school students all about Basic Financing.Topics include:- Cheque Cashing - Loans- Credit Cards - Payday Loans- Student Loans- Buying A Vehicle - Basic Financing Lessons for each topic are included in this worksheet bundle, as well as corresponding worksheets for each topic.
These high school worksheets are in pdf format and is very easily downloadable. The 9th-12th grade band materials support student learning for students at the ninth, tenth, eleventh, or twelfth grade levels. Many items can be used to teach basic skills that will be necessary for ninth through twelfth graders to master reading, writing, and ...
The average cost for students attending a public university is up 213% ($3,190 in 1988 to $9,970 in 2018), while private school is up 129% ($15,160 to $34,740) over the same time period. That's the primary reason Americans are $1.4 trillion in debt on student loans.
Students can use one of these worksheets to work through a business idea, product ideation, calculating profit, and much more. For example, Scholastic has a great set of free Shark Tank PDFs and lesson plans to use in high school classrooms. 9. Create a Savings Comic Strip
cars and loanslesson outline www.practicalmoneyskills.com cars and loans teacher's guide 6-ii presentation slides 6-A costs of owning and operating a motor vehicle 6-B how much can you afford? (the 20-10 rule) 6-C consumer decision making 6-D shopping for a used car 6-E sources of used cars 6-F shopping for a new car 6-G warranties 6-H service contracts 6-I shopping for a car loan
This worksheet is a mortgage loan introduction. Students need to fill in the table with the missing values for each of the problems. This is a random worksheet. You may choose a standard worksheet or customize the worksheet to your teaching needs. To customize the worksheet, you have several choices (see below).
This is a great packet of information and tips to help a first time homebuyer be successful. Career - Earning and Income/Management K-3 Grades 4-6 Grades Wanted Worksheet (pdf) 7-9 Grades Wanted Worksheet (pdf) 10-12 Grades Analyze a Pay Stub (pdf) Career Cluster Interest Survey (pdf)
Lesson 8: Making it Work Together: Money and Roommates. Lesson 9: A Plan for the Future: Making a Budget. Lesson 10: Make It Happen: Saving for a Rainy Day. Lesson 11: Savvy Spending: Sharpening Money Decisions. Lesson 12: Bank or Bust: Selecting a Banking Partner.
Student Loan Game Plan is integrated into our private loan program applications for student borrowers and their cosigners, and a free public version is available for college and high school students on our website. 2023 4 Purpose of This Guide
This type of budget plan is a good goal to work toward for students. The objective is to divide your income so that 50% goes to living expenses and needs, 30% goes to wants, such as spending money on hobbies or going out with friends, and 20% goes straight toward savings.
Calculating loan payments (guide) Student materials Calculating loan payments (worksheet) Note: Please remember to consider your students' accommodations and special needs to ensure that all students are able to participate in a meaningful way. Explore related resources Search for related CFPB activities Find financial education lessons from FDIC
Try these 12 fun saving and budgeting activities to teach financial literacy in your high school classroom: 1. Create a buying plan. Have students make a list of up to 10 items they'd like to buy. These items can range in price, but encourage students to think as big as they'd like. Then, ask students to get in groups to identify the things ...
Student Loans and Financial Aid Unit Bundle by Business Girl 4.8 (46) $8.75 $6.99 Bundle Google Drive™ folder High school students will soon be faced with the realities of paying for higher education. Give them the tools they need to make educated decisions about their financial future.
Penn State Federal School Code. 003329. Resources. PLUS vs. Private Loans. Social Media. Loan Worksheet. Welcome to the Office of Student Aid Loan Worksheet. This site was developed to help families plan for educational costs. By entering your information below, you can use this anonymous tool to estimate costs minus anticipated aid to help ...
This lesson teaches high school students the basics of budgeting, including understanding how revenue and expenses interact. Students learn about budgeting for college expenses and apply what they learn to real-life scenarios. They learn about a college student who consults with a financial planner to help him with strategies to manage his budget.
volunteer, school, or job experience first. Be sure to list school activities and volunteer experience as well as paid work experience. If you lack paid work experience, list chores, school activities and volunteer experience that you may have. For example, if you volunteer on Saturday at the animal shelter, you can add that experience to your
Consumer Math Worksheets. These worksheets break down basic math skills into easily digestible consumer math lessons. The lessons will teach your kids about personal finance, sales tax, and how to set up a monthly budget. Plus, you'll find real-life examples to help your kids develop their problem-solving skills.
Student loan interest deduction. ... You can use Worksheet 1-1 to figure the tax-free and taxable parts of your scholarship or fellowship grant. ... Mack graduated from high school in June 2021. In September, Mack enrolled in an undergraduate degree program at College U, and attended full-time for both the 2021 fall and 2022 spring semesters. ...
The Texas Higher Education Coordinating Board is offering a new loan aimed at increasing the number of Texans who complete degree programs for high-demand occupations, such as nursing, teaching ...
In a federal lawsuit filed Friday in Washington, SoFi Bank N.A. asked a federal judge to overturn President Joe Biden's latest extension of the payment pause. Student loan payments first were ...
High school student Cade Clark restored a 1954 John Deere tractor. LUBBOCK, Texas (KCBD/Gray News) - A high school senior in Texas is feeling confident about his life after graduation after he won ...