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Certain educational institutions located outside the Uni- ted States also participate in the U.S. Department of Edu- cation's Federal Student Aid (FSA) programs. Related expenses. Student activity fees and expenses for course-related books, supplies, and equipment are in- cluded in qualified education expenses only if the fees and expenses must be paid to the institution for enroll- ment or attendance. Prepaid expenses. Qualified education expenses paid in 2021 for an academic period that begins in the first 3 months of 2022 can be used in figuring an education credit for 2021 only. See Academic period, earlier. For ex- ample, if you pay $2,000 in December 2021 for qualified tuition for the 2022 winter quarter that begins in January 2022, you can use that $2,000 in figuring an education credit for 2021 only (if you meet all the other require- ments). You can't use any amount you paid in 2020 or 2022 to figure the qualified education expenses you use to figure your 2021 education credit(s). In the following examples, assume that each student is an eligible student at an eligible educational institution. Example 1. Jackson is a sophomore in University V's degree program in dentistry. This year, in addition to tui- tion, he is required to pay a fee to the university for the rental of the dental equipment he will use in this program. Because the equipment rental fee must be paid to Univer- sity V for enrollment and attendance, Jackson's equip- ment rental fee is a qualified expense. Example 2. Donna and Charles, both first-year stu- dents at College W, are required to have certain books and other reading materials to use in their mandatory first-year classes. The college has no policy about how students should obtain these materials, but any student who purchases them from College W's bookstore will re- ceive a bill directly from the college. Charles bought his books from a friend, so what he paid for them isn't a quali- fied education expense. Donna bought hers at College W's bookstore. Although Donna paid College W directly for her first-year books and materials, her payment isn't a qualified expense because the books and materials aren't required to be purchased from College W for enrollment or attendance at the institution. Example 3. When Marci enrolled at College X for her freshman year, she had to pay a separate student activity fee in addition to her tuition. This activity fee is required of all students, and is used solely to fund on-campus organi- zations and activities run by students, such as the student newspaper and student government. No portion of the fee covers personal expenses. Although labeled as a student activity fee, the fee is required for Marci's enrollment and attendance at College X. Therefore, it is a qualified ex- pense. CAUTION ! No Double Benefit Allowed You can't do any of the following. • Deduct higher education expenses on your income tax return (as, for example, a business expense) and also claim a lifetime learning credit based on those same expenses. • Claim a lifetime learning credit for any student and use any of that student's expenses in figuring your Ameri- can opportunity credit. • Claim a lifetime learning credit based on the same ex- penses used to figure the tax-free portion of a distribu- tion from a Coverdell education savings account (ESA) or qualified tuition program (QTP). See Coordi- nation With American Opportunity and Lifetime Learn- ing Credits in chapter 6 and Coordination With Ameri- can Opportunity and Lifetime Learning Credits in chapter 7. • Claim a credit based on qualified education expenses paid with tax-free educational assistance, such as a scholarship, grant, or assistance provided by an em- ployer. See Adjustments to Qualified Education Ex- penses next. Adjustments to Qualified Education Expenses For each student, reduce the qualified education expen- ses paid by or on behalf of that student under the follow- ing rules. The result is the amount of adjusted qualified education expenses for each student. Tax-free educational assistance. For tax-free educa- tional assistance received in 2021, reduce the qualified educational expenses for each academic period by the amount of tax-free educational assistance allocable to that academic period. See Academic period, earlier. Some tax-free educational assistance received after 2021 may be treated as a refund of qualified education ex- penses paid in 2021. This tax-free educational assistance is any tax-free educational assistance received by you or anyone else after 2021 for qualified education expenses paid on behalf of a student in 2021 (or attributable to en- rollment at an eligible educational institution during 2021). If this tax-free educational assistance is received after 2021 but before you file your 2021 income tax return, see Refunds received after 2021 but before your income tax return is filed, later. If this tax-free educational assistance is received after 2021 and after you file your 2021 income tax return, see Refunds received after 2021 and after your income tax return is filed, later. Tax-free educational assistance includes: • The tax-free part of scholarships and fellowship grants (see Tax-Free Scholarships and Fellowship Grants in chapter 1); • The tax-free part of Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chap- ter 1); Chapter 3 Lifetime Learning Credit Page 25