What tax benefits do we get if my spouse is a full-time student while I work? Joint filing question

This is super helpful, thanks! Quick question - does it matter if she's in grad school vs undergraduate for any of these benefits? And is the Lifetime Learning Credit better than the American Opportunity Credit, or can we claim both?

For graduate school, the Lifetime Learning Credit is typically your best option. The American Opportunity Credit is generally only available for the first four years of undergraduate education, so it wouldn't apply for graduate studies. You definitely can't claim both credits for the same student in the same year - you have to choose one. Since she's in grad school, Lifetime Learning is likely your only option between those two, but it's a good one, especially at your income level where you'd get the full benefit.

Did it help with figuring out which school expenses qualify? My wife's program has these weird fees besides regular tuition and I'm never sure what counts toward education credits.

I'm curious how it works with income phaseouts. We make around $90k joint and I've read mixed things about whether we'd even qualify for education credits.

Yes, it definitely helped clarify which expenses qualify! It analyzed our tuition statements and flagged which fees counted toward the credit. Generally, required course-related fees qualify, but things like room and board, transportation, or optional fees don't. It saved me from having to figure that out manually. For your income question, the tool actually runs the calculations based on your specific situation. At $90k for joint filers, you'd likely still qualify for a partial Lifetime Learning Credit since the phaseout for 2025 starts around $82k and goes up to $172k. The tool shows exactly how much you'd get based on your income.

How does this service actually work? I've tried calling the IRS multiple times and just get stuck in an endless phone tree or told to call back another day.

Yeah right. No way this actually gets you through to the IRS. I've literally tried calling them 8 times this year about education credits and never once got through. Sounds like a scam to me.

It's actually pretty simple - the service calls the IRS for you and navigates through all the phone menus and wait times. When they finally get a real person on the line, you get a call connecting you directly to that agent. No more waiting on hold for hours or getting disconnected. I was skeptical too, but it actually works. I had previously spent three separate afternoons trying to get through to the IRS myself with no luck. With this service, I got a call back within about 45 minutes connecting me to an actual IRS representative who answered all my questions about education credits. They don't promise instant access, but they do the waiting for you so you don't have to stay on the phone for hours.

What about scholarships? My wife got a partial scholarship for her program, but we're not sure if that affects the amount we can claim for the Lifetime Learning Credit. Does the credit only apply to what we actually paid out of pocket?

You're right to ask about scholarships. The Lifetime Learning Credit can only be claimed on expenses you actually paid, not amounts covered by tax-free scholarships or grants. So if tuition is $15,000 but your wife got a $5,000 scholarship, you can only claim the credit on the $10,000 you paid out of pocket. This is actually a really important point and something that can trigger IRS questions if you claim the full amount without subtracting scholarship funds. The school should provide a 1098-T form that shows both the total costs and scholarship amounts.

Does this apply if you get insurance through your employer though? My wife just started her PhD and I'm wondering if I should switch from my work insurance to marketplace.

Be careful with marketplace insurance though - if your income ends up higher than you estimated (like if your spouse gets a paid internship mid-year), you might have to pay back some of those subsidies when you file taxes. Happened to us last year and it was a nasty surprise.

This is really good advice about timing! I hadn't thought about paying spring tuition early to get the credit this year. One question though - if we pay for spring 2026 semester in December 2025, can we still claim the Lifetime Learning Credit on our 2025 taxes even if the classes don't start until January 2026? Want to make sure I understand the timing rules correctly before making any payment decisions.

Yes, exactly! You can claim the Lifetime Learning Credit on your 2025 taxes for spring 2026 tuition paid in December 2025. The IRS rule is based on when you make the payment, not when the academic period begins. So paying in December 2025 qualifies for your 2025 tax return, even though classes start in January 2026. Just make sure you don't double-count - you can only claim the credit once for each payment, so don't claim it again on your 2026 taxes. And definitely keep your payment records showing the December 2025 payment date in case the IRS asks questions. This timing strategy can be really helpful if you're expecting higher income next year that might reduce or eliminate your credit eligibility.

This is really comprehensive, thank you! I had no idea about the spousal IRA option - that could be a huge tax saver for us. Quick question on the record keeping: you mentioned keeping receipts for books "if required for enrollment" - does that mean optional textbooks don't qualify for the credit? My wife's program has a lot of recommended books that aren't technically required, but the professors basically expect you to have them. Just want to make sure I'm not claiming expenses I shouldn't be.

Great question about the books! For education tax credits, books and supplies only qualify if they're required for enrollment or attendance at the educational institution. "Recommended" books typically don't count, even if professors strongly suggest them. The key test is whether the school requires you to purchase them as a condition of enrollment in the course. However, there's a bit of flexibility here - if a professor's syllabus specifically states that certain books are "required" for the class, that could potentially qualify. The IRS looks at whether the educational institution requires the expense, not just whether it's helpful for learning. Your safest bet is to focus on expenses that are clearly required by the school - tuition, mandatory fees, and any books/supplies explicitly listed as required for enrollment. Keep the syllabi that show required materials, as that documentation could be helpful if questions come up later. The spousal IRA is definitely worth exploring! At your income level, you could contribute up to $7,000 for her and deduct the full amount, which could save you over $1,500 in taxes depending on your bracket.

This is exactly the kind of comprehensive breakdown I was looking for! The stacking approach makes so much sense - I hadn't realized we could combine all these benefits in one tax year. One follow-up question on the spousal IRA: since my wife has zero earned income while in school, I assume we'd be looking at a traditional IRA for the tax deduction rather than a Roth, right? And would her future earning potential as a grad student (like if she gets a stipend next year) affect our ability to make spousal contributions? Also really helpful point about tracking everything carefully. We're definitely leaning toward working with a tax pro this first year since there are so many moving pieces we haven't dealt with before.

You're absolutely right about the traditional vs Roth IRA decision! With your current income level and the fact that you'd get an immediate tax deduction, a traditional spousal IRA makes the most sense. You'll get that upfront deduction now when you know your tax situation, versus hoping for tax-free withdrawals decades from now. Regarding future stipends - if your wife gets earned income next year from teaching or research assistantships, it actually opens up more options rather than limiting them. She could potentially make her own IRA contributions based on her earned income, and you might still be able to make spousal contributions if her earned income is less than the contribution limit. One thing to consider: if she does get a stipend next year, it might push your joint income higher, potentially affecting the Lifetime Learning Credit. But you'd still likely qualify for student loan interest deductions and IRA contributions since those phase out at much higher income levels. Working with a tax pro for the first year is definitely smart - they can help you set up systems to track everything properly and identify planning opportunities you might miss on your own. Plus they can help you understand how any changes in your wife's academic status or income might affect your strategy going forward.