Education Tax Credits for Immigrants and International Students

The Direct Answer

Immigrant students and families who are resident aliens for US tax purposes can claim education tax credits. The key question is not your visa type but your tax residency status. Nonresident aliens - such as most F-1 and J-1 visa holders in their first five years - generally cannot claim these credits. Resident aliens who pass the Substantial Presence Test can.

Two Main Education Credits

American Opportunity Tax Credit (AOTC)

The AOTC is the more valuable credit for undergraduate students:

• Worth up to $2,500 per eligible student per year
• Covers 100% of the first $2,000 in qualified expenses, plus 25% of the next $2,000
• 40% refundable - up to $1,000 can be received as a refund even if you owe no tax
• Available only for the first four years of post-secondary education
• Requires the student to be enrolled at least half-time in a degree program
• Requires a valid SSN for the student (not an ITIN)

Lifetime Learning Credit (LLC)

The LLC is more flexible but worth less:

• Worth up to $2,000 per tax return (not per student)
• Covers 20% of the first $10,000 in qualified education expenses
• Not refundable - it can only reduce your tax owed to zero
• Available for any number of years and any post-secondary courses, including job skills courses
• No half-time enrollment requirement
• ITIN filers who are resident aliens may use this credit

Income Limits for 2024

Both credits phase out completely at the upper income limit. Modified Adjusted Gross Income (MAGI) is used for the phase-out calculation.

Residency Status: The Critical Factor for Immigrants

Your immigration visa does not directly determine your eligibility. What matters is your tax residency status:

Resident alien (can claim credits): You pass the Substantial Presence Test, meaning you were in the US for at least 31 days in the current year and 183 days across the current and prior two years (using a weighted formula). Green card holders are automatically resident aliens.

Nonresident alien (cannot claim credits): F-1 and J-1 visa holders are typically exempt from the Substantial Presence Test for their first 5 years in the US, which means they remain nonresidents and cannot claim the AOTC or LLC. After those 5 years, they begin counting days and can eventually become resident aliens.

Dual-status year: If you became a resident alien mid-year, you file a dual-status return. You can only claim education credits for the portion of the year you were a resident alien.

Qualified Education Expenses

Both credits count the following as qualified expenses:

• Tuition paid to an eligible educational institution
• Required fees (lab fees, library fees charged to all students)
• Course-related books, supplies, and equipment required for enrollment (AOTC only for books)

The following do not count:

• Room and board
• Insurance
• Medical expenses
• Transportation
• Personal, living, or family expenses

Form 1098-T and Form 8863

Your school will issue Form 1098-T by January 31 each year, showing the tuition amounts billed or paid. To claim either credit, you must complete Form 8863 (Education Credits) and attach it to your Form 1040.

Note: Box 1 of Form 1098-T shows amounts paid, while Box 2 (now rarely used) showed amounts billed. Use the amounts actually paid during the year.

Steps to Claim an Education Credit

1. Confirm your tax residency status (resident alien vs. nonresident alien)
2. Collect Form 1098-T from each eligible institution
3. Verify the student has a valid SSN (required for the AOTC; not required for LLC)
4. Complete Form 8863 to calculate the credit
5. Attach Form 8863 to your Form 1040 and enter the credit on the appropriate line

Get Your Personalized Form List

Education credits depend on your visa type, residency status, income level, and years of study completed. Start the free 5-minute diagnostic to find out which education credits apply to your situation.