Possibility 1: You Can Only Claim One Education Credit

• In 2009, the IRS replaced the HOPE credit with the larger American Opportunity credit. You can only claim one education tax credit per person. Thus, if you claimed the American Opportunity credit, you cannot receive the HOPE or Lifetime credit. The Opportunity credit is larger than the Lifetime credit too, so you benefit the most in this scenario.
  
  

Possibility 2: Too Many Claims

• You cannot claim the HOPE or Lifetime credit for more than two years, so it is possible you are trying to claim one for a third time. Also, single filers cannot make more than $60,000 per year, or $120,000 for a joint filing. The Lifetime learning credit has limit of $1,000 per family, not per student. The student or parent or legal guardian can claim the credit, but not both. If the student is a dependent, he cannot claim any tax credit.
  
  

Considerations

• Either credit requires you have qualified higher education expenses, according to the IRS. The formula for these credits subtracts any federal, such as the Pell Grant, from your college costs. Qualified expenses are those necessary to attend school, which is typically relegated to tuition. Some common expenses, such as a car or noncredit classes, are usually not considered a qualified expense unless required by the institution.
  
  

Tip

• The American Opportunity credit is a much more desirable credit than either the HOPE or Lifetime credit. The AOC is available for four years rather than the standard two years. Also, it is refundable up to 40 percent---to maximum of $1,000. If you do not qualify for any education credit, you may deduct education expenses from your taxable income. Take a class related to your job, and it counts as a legitimate business cost.