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Advanced Course > Education Credits

Education Credits

This lesson covers tax credits available to help the taxpayer offset the costs of higher education by reducing the amount of income tax. The amount of the credit is based on qualified education expenses the taxpayer paid during the tax year.

Click the Skills Workout button to learn more about education credits.

Skill Check

Check your understanding of rules regarding education credits. To check your answers, click the Check My Answers button at the bottom of the page.

  1. In some circumstances, eligible students can claim education credits for themselves even if their parents actually paid the qualified tuition and related expenses.
  • A.
  • B.
  1. Rita and Ted, both first-year university students, are required to have certain books and other reading materials to use in their mandatory first-year classes. Ted bought his books from a friend, and Rita bought her materials at the university bookstore. Both Rita's and Ted's payments for books qualify as a related expense for the American opportunity education credit.
  • A.
  • B.
  1. This tax year, Sheila's parents paid $4,000 of their own funds for her college tuition. Sheila also received a Pell grant for $1,000 and a student loan for $2,000. For purposes of figuring an education credit, Sheila's parents' total qualified tuition and related expenses are $1,000.
  • A.
  • B.