Page 1: What Are Education Credits for Grad School?
If you’re in graduate school, you may be able to save money with education credits for grad school. These tax breaks can reduce the amount you owe the IRS or increase your refund.
There are two main types of education credits that students in grad school should know about:
- Lifetime Learning Credit (LLC)
- American Opportunity Tax Credit (AOTC)
Let’s break them down and show how to claim them.
What Is the Lifetime Learning Credit?
The Lifetime Learning Credit helps graduate students save money on their taxes. You may qualify for up to $2,000 per year. It works whether you’re full-time or just taking one course.
To claim it, you must:
- Attend an eligible school
- Take at least one class
- Pay qualified education costs
- Meet income limits (in 2025, that’s around $90,000 for single filers, or $180,000 for couples)
This is the most common of the education credits for grad school because the AOTC usually only applies to undergrads.
What Are Qualified Expenses?
To use education credits for grad school, your expenses must count as “qualified.” These include:
- Tuition
- Enrollment fees
- Required books and supplies
Not included:
- Housing
- Transportation
- Health insurance
- Meals
Make sure to only count costs that are required by the school or program.
Page 2: How to Claim Education Credits for Grad School
Let’s walk step-by-step through how to claim education credits for grad school on your taxes. Doing it right can lead to major savings!
Step 1: Get Form 1098-T From Your School
Your university or grad school will send you Form 1098-T each year. This form lists how much you paid in tuition and any scholarships you received.
Pay close attention to:
- Box 1: Payments you made
- Box 5: Grants or scholarships you received
Subtract Box 5 from Box 1 to find out how much of your payment is eligible for the credit.
Step 2: Track All Your Expenses
Form 1098-T is a good start, but it may not include everything. Save your:
- Book receipts
- Tech fees
- Lab and course material costs
You’ll need these to back up your claim for education credits for grad school if the IRS ever checks.
Step 3: Complete IRS Form 8863
To claim the Lifetime Learning Credit, you’ll need to fill out Form 8863 along with your regular tax return (Form 1040).
Steps:
- Enter your name and school info
- Report your qualified expenses
- Use the worksheet to calculate your credit
Most tax software will walk you through this if you enter your 1098-T.
Step 4: Submit and Save Everything
Once done, file your return and keep copies of:
- Form 8863
- Form 1098-T
- Receipts
It’s a simple process, but missing a step could delay your refund.
Page 3: Tips to Maximize Education Credits for Grad School
Here are smart tips to help you get the most out of education credits for grad school, and avoid mistakes that cost students money.
Use the Credit Only for Out-of-Pocket Costs
If your tuition was paid with a scholarship or employer reimbursement, you can’t claim that amount. Only use money you actually paid yourself.
Example:
- Tuition: $6,000
- Scholarship: $2,000
- You can only claim $4,000
Check the Income Limits
In 2025, the credit phases out at:
- $80,000 for single filers
- $160,000 for married filers
Make sure your income is under the limit to get the full amount of the credit.
Part-Time Students Qualify Too
One big benefit of the Lifetime Learning Credit is that you don’t need to be full-time. Even taking one course per year may qualify you.
This is great news for students working full-time or returning to school slowly.
File Your Return Even if You Don’t Owe
Some grad students don’t make enough money to owe taxes. Still, file your return! You may still qualify for the credit and get a refund.
Final Thoughts
Understanding education credits for grad school is a smart way to save money while you earn your degree. Here’s a quick checklist:
- ✅ Get Form 1098-T
- ✅ Gather your receipts
- ✅ File IRS Form 8863
- ✅ Stay under income limits
- ✅ Claim the Lifetime Learning Credit
Graduate school is expensive, but these tax credits help you keep more of your money. Don’t miss out—file smart and get the credit you deserve!
