Working student with an education credit
A single filer working full time and finishing a bachelor's part time. One W-2, one 1098-T, and the American Opportunity Tax Credit, split into its refundable and nonrefundable parts.
Taxpayer facts
Who this is and what their year looked like.
Andre is single, 25, and works full time in Nashville while finishing his bachelor's degree part time in the evenings.
He paid his own tuition, is enrolled at least half time, and is not claimed as anyone's dependent. He has one W-2 and takes the standard deduction.
- NameAndre M. Castillo
- Date of birth04/12/2000
- SSN414-72-9053
- Age (as of 12/31/2025)25
- Filing statusSingle
- DependentsNone
- Claimed as a dependent by anyone else?No
- OccupationLogistics coordinator
- Student statusUndergraduate, 3rd year, at least half-time
- Address640 Fesslers Ln, Apt 3, Nashville, TN 37210
- ResidencyTennessee, full year (no state income tax)
Source documents
Work from these the way you would a real client's paperwork. Everything is fictional.
Objectives
What a correct return should capture.
- File as Single, and confirm Andre is NOT claimable as anyone else's dependent (required to take the education credit himself).
- Report the W-2 wages.
- Apply the 2025 single standard deduction ($15,750).
- Compute the American Opportunity Tax Credit on Form 8863 from the qualified tuition: 100% of the first $2,000 plus 25% of the next $2,000, up to $2,500 per student. Check his modified AGI against the $80,000 single phase-out to see whether any reduction applies.
- Split the credit correctly: 60% is nonrefundable and reduces the tax; 40% is refundable. Because Andre is not under 24, the refundable portion is not restricted.
- Reconcile withholding plus the refundable credit to the refund or balance due.
- Note that Tennessee has no state income tax, so there is no state return here.
Check your work
The answer key and the complete return, the way a real client receives it: the 1040 and its schedules, the workpapers behind every number, and the signature forms.
Stuck? Work through it with Yehuda
A one-on-one, 30-minute tutoring session on this return with Yehuda Tenenbaum, EA. Bring the spot where you got stuck and we will work through it together: how the forms connect, why a figure lands where it does, and how to check your work. $250. This is education on the practice return, not advice on your own taxes.