Form 8863 vs 8917 for college tuition payments - which is better or should I file both?
I paid around $14,500 to my university this past year and I have my 1098-T showing everything I paid. I'm really confused about which tax form would be more beneficial for me when filing my return. Should I be claiming the American Opportunity Credit using Form 8863 (which would go on line 50 of my 1040), or should I use Form 8917 for the Tuition and Fees Deduction? Or is it possible/better to somehow use both forms? This is my third year in college and I'm trying to maximize my refund. I worked part-time throughout the year making about $24,000 total. My parents aren't claiming me as a dependent if that matters. Any advice would be appreciated! I'm using tax software but want to make sure I'm making the right selection when it asks me about education expenses.
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Esteban Tate
The American Opportunity Credit (Form 8863) is usually more valuable than the Tuition and Fees Deduction (Form 8917) for most students. The AOTC can give you up to $2,500 back, and $1,000 of that is refundable (meaning you get it even if you don't owe taxes). The Tuition and Fees Deduction is just that - a deduction that reduces your taxable income, not a dollar-for-dollar reduction of your tax bill like a credit does. You cannot claim both for the same expenses - it's one or the other. Your tax software should compare both options and choose the most beneficial one for you, but generally with $14,500 in qualified expenses and your income level, the AOTC would likely be better. One thing to consider: AOTC can only be claimed for 4 tax years per student, so if you've already claimed it for 4 years, you'd need to go with Form 8917 instead.
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Alice Pierce
•Thank you! I didn't realize the AOTC was limited to 4 years. This is only my third year claiming it, so sounds like I'm still eligible. Do qualified expenses only include tuition or can I also count my textbooks and required course materials?
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Esteban Tate
•You can definitely include required textbooks and course materials in your qualified expenses for the AOTC, even if you didn't purchase them directly from the school. Just keep your receipts in case of an audit. For the Tuition and Fees Deduction (Form 8917), the rules are more restrictive and generally only include tuition and fees required for enrollment - not books unless they were paid directly to the school as a condition of enrollment.
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Ivanna St. Pierre
I was in a similar situation last year with about $16k in tuition and used taxr.ai to help figure out my education credits. It basically analyzes your 1098-T and other education expenses (https://taxr.ai) and tells you exactly which form is better for your situation. For me, it confirmed the AOTC was better but also found some qualified expenses I was missing (lab fees and online access codes). Ended up getting about $800 more than I expected. The nice thing was it explained all the rules around what counts as a qualified expense for each credit/deduction.
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Elin Robinson
•Did it actually save you time compared to just answering the questions in regular tax software? I'm using TurboTax and it asks about education expenses but doesn't really explain the differences between the options.
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Atticus Domingo
•How does it work with student loans though? I paid tuition with loans so I don't have receipts showing I personally paid it. Would this still help in that case?
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Ivanna St. Pierre
•It definitely saved me time compared to regular tax software. TurboTax asks the questions but doesn't really help optimize which expenses qualify for which credit. The tool breaks down exactly what qualifies under each option and why. For student loans, it actually handles that situation too. You can claim the credit in the year you pay the tuition, even if you used loan money to pay it. The system explains exactly how to report it correctly so you don't miss out on credits you're entitled to.
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Atticus Domingo
Just wanted to update - I tried taxr.ai after posting my question and it was actually super helpful! I was overthinking the whole loan situation. The system confirmed I could claim the AOTC for the $14k+ I paid in tuition even though I used loans, and it found about $600 in book expenses I wasn't going to include. Ended up with a much bigger refund than expected. Definitely going with the 8863 form instead of 8917. The difference was almost $1,500 in my case!
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Beth Ford
I went through this same headache last year and spent HOURS on hold with the IRS trying to get clarification. If you need to speak with someone at the IRS about education credits, try Claimyr (https://claimyr.com). There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c It got me connected to an IRS agent in about 15 minutes when the regular wait was 2+ hours. The agent was able to confirm exactly which education credit was best for my situation and cleared up my confusion about some of my qualifying expenses.
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Morita Montoya
•Wait, this is actually a thing? How does it work? I thought it was impossible to reach the IRS by phone these days.
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Kingston Bellamy
•Sounds sketchy tbh. Why would I pay for something the IRS offers for free? The IRS website explains all this stuff without needing to talk to anyone.
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Beth Ford
•It basically calls the IRS for you and navigates all the phone menus, then alerts you when an agent is about to pick up. So you don't waste hours waiting on hold. It's not sketchy at all - the IRS phone service is free, but the wait times are insane. I tried calling myself first and gave up after an hour on hold. This just saves you from the hold time. The conversation is still directly between you and the actual IRS agent, the service just handles the waiting part.
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Kingston Bellamy
I was wrong about Claimyr. I was skeptical but tried it yesterday after waiting on hold with the IRS for over an hour trying to figure out if my summer classes qualified for the AOTC. The service actually got me through to an agent in about 20 minutes. The agent confirmed that summer classes DO count toward the AOTC as long as they're part of my degree program, which my tax software wasn't clear about. Ended up being able to claim an additional $1,800 in qualifying expenses I would have missed. Sometimes you really do need to talk to a human at the IRS.
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Joy Olmedo
Make sure you check the income limits too! If your modified AGI is over $90,000 (or $180,000 if married filing jointly), you can't claim the AOTC at all. The deduction from Form 8917 phases out at different income levels. Also, if someone else (like your parents) claims you as a dependent, they get to claim these education benefits, not you. Just wanted to mention that since I got burned by this when I was in school.
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Alice Pierce
•Thanks for mentioning this. My income is definitely under the limit, and my parents and I already confirmed they're not claiming me as a dependent this year. Are there any other gotchas I should watch out for?
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Joy Olmedo
•Another thing to watch for is making sure your school is eligible - it needs to participate in federal student aid programs. Almost all accredited colleges do, but it's worth checking. Also, be careful about which expenses you include. Room and board don't count for either the AOTC or the tuition deduction. And if you got any tax-free scholarships or grants, you need to subtract those from your qualified expenses before calculating your credit or deduction.
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Isaiah Cross
anybody know if AOTC is better than the Lifetime Learning Credit? my tax guy said AOTC is usually better but depends on your situation
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Esteban Tate
•AOTC is almost always better than the Lifetime Learning Credit if you qualify for both. AOTC gives up to $2,500 with $1,000 being refundable, while Lifetime Learning only gives up to $2,000 and none is refundable. AOTC is only for the first 4 years of undergraduate education though, while Lifetime Learning has no limit on years and can be used for graduate school or professional courses. So if you're beyond your 4th year or in grad school, Lifetime Learning would be your only option between those two credits.
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Isaiah Cross
•thx that makes sense. im still in undergrad so AOTC sounds better for me
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Katherine Hunter
Just wanted to add a few key points that might help others in similar situations: 1. The AOTC requires you to be enrolled at least half-time in a degree program, while the Tuition and Fees Deduction doesn't have this requirement. 2. If you receive a refund from your school for any reason (dropped classes, etc.), you need to reduce your qualified expenses by that amount or potentially pay back part of the credit. 3. Keep ALL your receipts and documentation - not just the 1098-T. The IRS can audit education credits, and you'll need proof of what you actually paid and when. 4. If you're planning to continue school beyond 4 years total (including any previous colleges), start thinking about whether to save some AOTC eligibility for later years when your expenses might be higher. With your income level and being in year 3, the AOTC is definitely your best bet. Just make sure you're tracking everything properly for future years!
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