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Highlights of Education Tax Benefits for Tax Year 2021 This chart highlights some differences among the benefits discussed in this publication. See the text for definitions and details. Don't rely on this chart alone.

Caution: You generally can't claim more than one benefit for the same education expense. Appendix B. Scholarships, Fellowship Grants, Grants, and Tuition Reductions American Opportunity Credit Lifetime Learning Credit Student Loan Interest Deduction Coverdell ESA† Qualified Tuition Program (QTP)† Education Exception to Additional Tax on Early IRA Distributions† Education Savings Bond Program† Employer- Provided Educational Assistance† Business Deduction for Work-Related Education What is your benefit? Amounts received may not be taxable

Credits can reduce the amount of tax you must pay.

40% of the credit may be refundable (limited to $1,000 per student). Credits can reduce the amount of tax you must pay Can deduct interest paid Earnings not taxed Earnings not taxed No 10% additional tax on early distribution Interest not taxed Employer benefits not taxed Individuals who are self- employed, Armed Forces reservists, qualified performing artists, fee- based officials, or disabled can deduct certain expenses What is the annual limit? None $2,500 credit per student $2,000 credit per tax return

$2,500 deduction $2,000 contribution per beneficiary None Amount of qualified education expenses Amount of qualified education expenses $5,250 exclusion Amount of qualifying work-related education expenses What expenses qualify besides tuition and required enrollment fees? Course-related expenses such as fees, books, supplies, and equipment Course-related books, supplies, and equipment Amounts paid for required books, etc., that must be paid to the educational institution are required fees Books Supplies Equipment

Room & board

Transportation

Other necessary expenses Books Supplies Equipment

Computer equipment, computer software, or Internet access and related services

Expenses for special needs services

Payments to QTP

Higher education: Room & board if at least half-time student

Elem/sec (K–12) education: See chapter 6 Higher education: Books Supplies Equipment

Computer equipment, computer software, or Internet access and related services

Expenses for special needs services

Room & board if at least half-time student

Elem/sec (K-12) education: See chapter 7 Books Supplies Equipment

Room & board if at least half-time student

Expenses for special needs services Payments to Coverdell ESA

Payments to QTP Books Supplies Equipment Transportation

Travel

Other necessary expenses Page 80 Publication 970 (2021)