Does Unpaid Training Qualify for Tax Education Credits?

February, 11 2025 by Carolyn Richardson, EA, MBA

If my son is doing fire fighting training with no pay, is that considered to be a student?

-Michael, Virginia  



Hello Michael,

Thank you for submitting your question to our blog. You asked a great question and I’m sure others are also wondering if an unpaid training program qualifies for any educational expenses or credits.

Keep in mind that this response may change depending on the nuances of your particular situation. Because we do not have a lot of information with your question, we cannot determine with any certainty whether you qualify for one of the education credits or other education tax benefits. Even a small and seemingly insignificant change in your circumstances could change the answer.

If your child is a student in a firefighting training program, you may be wondering if you can still claim them as a Qualifying Child on your tax return. Generally, a dependent under the age of 24, who is a full-time student for some part of five calendar months during the year, can still be claimed as a Qualifying Child. For a Qualifying Child, the test for being a student is defined as follows: they must be a student at an educational organization or an on-farm training program. An educational organization, in this sense, is defined as one that has a regular teaching staff, course of study, and a regularly enrolled student body, or a student taking a full-time, on-farm training program course given by a school or government agency. It includes not only colleges and universities, but also technical, trade, and mechanical schools. It does not include noneducational institutions or on-the-job training courses (except for a qualified on-farm training program). The determination of “full-time” is based on the number of hours or courses they are enrolled in, and the five calendar months do not need to be consecutive.

There are also two education credits available to taxpayers: the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Tax Credit (LLTC). Both credits are determined by the amount that you spend on the educational program. These credits can generally be claimed for education enrollment for the taxpayer, their spouse, and any dependents. To claim either of these credits, you generally must receive a Form 1098-T from the educational institution showing how much tuition has been paid.

The AOTC is more generous than the LLTC, but it is also more limited in who can claim the credit. The AOTC is limited to the first four years of higher education and is calculated on a per student basis. Also, the AOTC has a refundable portion for lower income taxpayers, meaning they can receive part of the credit even if they have no tax liability. To qualify for the AOTC, the student must also be working toward a degree, certificate, or other post-secondary credential. There are other qualifications for this credit, but since a training program such as you describe is not likely to be degree oriented, we won’t get into more details here. If you want more information on the qualifications, please refer to the IRS Publication 970 (link below).

The good news is that you may be able to claim the Lifetime Learning Tax Credit on your tax return, if you otherwise qualify. The Lifetime Learning Tax Credit is equal to 20% of the qualified education expenses paid during the tax year, up to a maximum of $10,000. Therefore, the maximum credit is $2,000 per return (not per student) and this credit is not refundable, meaning you must have a large enough tax liability to claim the full credit; otherwise, it is limited to your tax liability. The other good thing is that you can claim this credit as many times as applicable over multiple tax years, as there is no limit to the number of years the Lifetime Learning Tax Credit can be claimed by an individual. Also, unlike the American Opportunity Tax Credit, the Lifetime Learning Tax Credit is not limited to the first four years of post-secondary education. It can be used even if you are not pursuing a degree or another recognized education credential, and it can be claimed even if you are taking the class to improve or even acquire job skills. Therefore, an unpaid training position to become a firefighter would qualify for the Lifetime Learning Tax Credit if it is done through an accredited institution.

Education expenses must be incurred at an eligible educational institution, such as any college, university, vocational school, or other post-secondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education. It can also include certain educational institutions located outside of the United States that are eligible to participate in the student aid program administered by the U.S. Department of Education. Your institution should be able to tell you whether they are an eligible education institution.

As we mentioned earlier, the credit amount is based on the amount of qualified educational expenses. Qualified education expenses usually refer to tuition and related expenses required by the institution where the student is attending classes or training and can include books, supplies, and equipment required for enrollment or attendance at the eligible institution. Qualified expenses do not generally include room and board. It also does not include student health fees or transportation to and from the institution. Therefore, to claim the credit, you must be incurring expenses. The amount of eligible expenses is also reduced by any scholarship, grant, or other tax-free assistance received for attending the program. Therefore, you cannot use expenses paid for by a scholarship or grant to calculate the American Opportunity Tax Credit or Lifetime Learning Tax Credit, or for determining the tax-free portion of a distribution from a Coverdell education savings account or a qualified tuition program.

Additionally, both the AOTC and LLTC have income limitations. Depending on what filing status you use, your adjusted gross income (AGI) may limit your ability to claim this credit. If you are filing as Single, Head of Household, or Qualifying Surviving Spouse, your adjusted gross income must be below $80,000 to claim the full credit, and it phases out completely when your adjusted gross income is $90,000. If you're filing jointly with your spouse, the threshold is increased to $160,000 through $180,000, with no credit being available once you hit the upper limit. If you file as married filing separately, you cannot claim any of the education credits. Unlike many things in the tax code, these thresholds are not adjusted for inflation.

If your training program is conducted through a union, such as the firefighters or police unions, it would likely not qualify for the educational credit under the Lifetime Learning Tax Credit rules, as a union would not normally be considered a qualified educational institution.

You can find more information on education tax benefits in Publication 970, Tax Benefits for Education.

We hope this answer helps you to determine if this program qualifies someone as a student.

Sincerely,
Carolyn Richardson, EA, MBA