If you want to receive a tax break for college tuition and expenses you should know that there are two main deductions and tax credits that you can claim. The lifetime learning tax credit and the tuition and fees tax deduction. There is also the student loan interest tax deduction. Tax deductions reduce taxable income, credits reduce tax liability. Note, that you may not claim both tax credit and deductions on tuition and fees in the same year for the same student.
You can qualify for the tuition and fees deduction if your adjusted gross income is below $80,000. The deduction is for qualified school expenses up to $4,000. The lifetime learning tax credit is $2,000 and applies to tax filers claiming themselves or a dependent. Keep in mind that you cannot claim more than one education tax credit.
Qualified deductible education expenses include the following:
- tuition and fees
- room and board (if at least half-time enrolled)
- computer technology
The student loan interest deduction is up to $2,500. You deduct the annual interest on a qualified student loan. You can qualify for this deduction if your adjusted gross income is less than $70,000. For more information or for future reference go to http://www.IRS.gov and look up publication 970.