Understanding Your CP03B Notice

A credit for qualified education expenses paid for an eligible student for the first four years of higher education.

An eligible student must meet at least the following:

• Not have claimed the AOTC or the former Hope credit for more than four tax years.
• Be pursuing a degree or other recognized education credential.
• Be enrolled at least half time for at least one academic period beginning in the tax year.
• Not have finished the first four years of higher education at the beginning of the tax year.
• Not have a felony drug conviction at the end of the tax year.

The amount that you can claim may change based on your modified adjusted gross income (MAGI).

• To claim the full credit, your MAGI must be $80,000 or less ($160,000 or less for married filing jointly).
• You receive a reduced amount of the credit if your MAGI is over $80,000 but less than $90,000 (over $160,000 but less than $180,000 for married filing jointly).
• You cannot claim the credit if your MAGI is over $90,000 ($180,000 for joint filers).

Visit Interactive Tax Assistant: Am I eligible to claim an education credit?, for more information.

Regardless of a student’s academic year, you may only claim the AOTC for up to four tax years.

Schools set the academic year. Examples of academic years include semesters, trimesters, and quarters. Academic years may be different than tax years, and this is important for properly claiming the AOTC.

A tax year is an annual accounting period for keeping records and reporting income and expenses. This is often a calendar year – 12 consecutive months beginning January 1 and ending December 31. Ensure you review how your school reports their academic year on your Form 1098-T. See the table below for an example of Academic and Filing Years or for more examples visit chapter 2, Publication 970 PDF.

Table 1. Examples of Academic years, academic periods, and filing tax years

* Your Form 1098-T, provided by your school, should reflect the academic periods within a given tax year.

If you or your dependent doesn’t qualify for the AOTC, you or your dependent may qualify for the Lifetime Learning Credit (LLC). This credit is for qualified tuition and related expenses paid for eligible students enrolled in an eligible educational institution. This credit can help pay for undergraduate, graduate, and professional degree courses — including courses to acquire or improve job skills. There is no limit on the number of years you can claim the credit. It is worth up to $2,000 per tax return.