How to Claim a Continuing Education Tax Deduction Overseas| USTAXFiling

Inflation is increasing across the globe. Expats struggle to cover the higher education expenses. Let us understand about two continuing education tax deduction that you may use to offset your taxes as an expat.

Expenses are increasing across the globe and expats struggle to cover their education expenses. Also, the Internal Revenue Service is there to assist you. In this article, we will discuss about how to claim a continuing education tax deduction overseas.

What are Continuing Education Tax Deduction?

Americans who pursue higher education may claim specific credits and deductions to decrease their US tax burden. You may claim credits if your dependent or spouse has been admission to a university, college, or other educational institution.

There are two major continuing tax deductions available for Americans overseas. One is Lifetime Learning Credit and another is American Opportunity Credit. Let us learn more about continuing tax deductions:

What Is the American Opportunity Credit?

Continuing education tax deductions for Americans called American Opportunity Credit are available. They provide income taxpayers a tax credit to cover eligible education costs. Eligible income taxpayers will decrease their tax liability by a dollar-for-dollar amount depending on the amount they may claim under the credit.

It covers the first 100 percent of the first $2000 in adjusted eligible education costs paid and only 25 percent of excess beyond that up to a $500 cap. So, the maximum account you may claim is $2500 under the American Opportunity Credit.

The American Opportunity credit is refundable partially. If you don’t owe income taxes or this credit helps you to reduce your tax liability to zero, you may get 40 percent of the remaining credit as a refund. It can be up to a cap of $1000.


If your spouse, dependent or you are enrolled in a higher education, you can claim the American Opportunity Credit. To become eligible, all of the following should be true:

  • The student has not completed their four-year post-secondary education
  • The student has enrolled half-time for one academic semester during the income tax year
  • The student is enrolled in a program that leads to a learning credential, certificate, or even a degree
  • The student has never been convicted of any drug crime or any other criminal activity
  • The income taxpayer claiming the credit has an adjusted gross income of $90000 or even less

If you become eligible, you may claim the American Opportunity Credit for a minimum of four years. Once you claim the credit for four years, it is not available for the student. Also, you may claim it again for another student such as a dependent or a spouse. The amount you may claim starts to phase out if your income is more than $80,000.

Eligible Education Expenses

If eligible, you may claim income tax credits to offset the following expenses:

  • Course materials like supplies and books (it implies if you don’t buy these items from the school)
  • Enrollment expenses and fees, tuition expenses paid to an eligible educational institution
  • Non-academic student activity charges are paid to the school as an enrollment condition.

Also, the American Opportunity Credit does not cover these expenses:

  • Transportation
  • Insurance
  • Board
  • Room
  • Medical expenses that include student health fees
  • Insurance

What Is the Lifetime Learning Credit?

The next continuing education tax deduction for Americans overseas is the Lifetime Learning Credit. This income tax benefit like the American Opportunity Credit offers a dollar-to-dollar credit for eligible education costs. Also, the regulations for who is eligible and how much you may claim the benefit are different.

Income taxpayers with the lifetime learning credit may claim a credit of 20 percent of their adjusted eligible education costs up to a maximum $2000 credit. This is not refundable, unlike the American Opportunity Credit.


To become eligible for the Lifetime Learning Credit is easier than the American Opportunity Credit. To become eligible for this credit, this is the following eligibility threshold:

  • You should have an adjusted gross income of less than $1,38,000 as a joint return and $69,000 as an independent income
  • Your spouse, dependent or you are enrolled in an eligible educational institution for a minimum of one academic period (quarter, trimester, summer school, and semester)

There is no specific limit to how many years you may claim this credit. The student should not be working for a degree. Also, a $2000 yearly limit applies to each income tax return, not to every student. It means that if you have many members in your family who are eligible for this credit, you may claim a combined total of $2000 for all of them every year. The amount you may claim starts to phase out if your income is more than $59,000.

Eligible Education Expenses

The eligible education expenses you may claim under this Lifetime Learning Credit are the same as the American Opportunity Credit. It means you may claim the following education expenses that include:

  • Non-academic student activity charges paid to the school as an enrollment condition
  • Fees, enrollment expenses, and tuition expenses are paid to an eligible educational institution
  • Course materials such as supplies and books (it is applicable even if you don’t buy any food items from the school)

Other expenses

  • Medical expenses
  • Insurance
  • Board
  • Room
  • Transportation

How You Can Claim a Continuing Education Income Tax Credit

To claim a continuing education income tax credit is the same regardless of whether you claim the Lifetime Learning Credit or the American Opportunity Unit.

Educational institutions at the end of the income tax year in question must send you Form 1098-T. This Form 1098-T reports all expenses that are eligible for an income tax credit. To claim the credit, you should follow these steps:

  • Calculate the total credit amount you may claim depending on the details from Form 1098-T
  • You may transfer the credit to an income tax return
  • Make sure to file an income tax return with form 8863 attached

Remember: You cannot claim both Lifetime Learning Credit and American Opportunity Credit in the same year. If you are eligible for both, you may visit a tax consultant to know which is the best choice in your scenario.

Can You Claim a Continuing Education Tax Deduction without Form 1098-T?

In several cases, you cannot claim a continuing education income tax deduction without Form 1098-T. Also, it is not always true. You can claim the Lifetime Learning Credit or American Opportunity Credit, if you may prove that you are eligible.

This proof includes:

  • Records indicating that you are not ineligible for the income tax credit
  • Records for any eligible costs
  • Records of enrollment at an eligible educational institution

If you don’t have documentation, you can get it by connecting with the school. You may consult a tax expert to know more.

Get the Answers You Need for Your Expat Income Taxes

In this article, we discussed how you may claim a continuing education tax deduction while residing overseas. At, we are experts in assisting expats around the globe to manage their US income tax obligations. If you need any assistance related to income tax filing,, would be happy to assist you! So, Call USTAXFiling, your tax assistant now!

Table of Contents