Lexington Tax Preparation
COLLEGE EDUCATION CREDITS
AND DEDUCTIONS:
The American Opportunity Tax Credit
(Formerly the Hope Credit)
The Lifetime Learning Credit
The Tuition and Fees Deduction
American Opportunity Tax Credit, which replaced the Hope credit, can be claimed for the first four years of college. This tax credit could be as high as 2,500.
The term "qualified tuition and related expenses" has been expanded to include "course materials," which means could include books, supplies and other equipment.
The tax credit is based on 100 percent of the first $2,000 of tuition, fees and course materials and 25 percent of the next $2,000.
If you qualify for more of the credit than your tax liability, you may still receive some of this credit.
If you adjusted Gross Income is more than $80,000 ($160,000 for joint filers) you will not be eligible for the credit.
In order to claim this credit, form 8863 needs to be included with your individual tax return.
At this point, the American Opportunity Tax Credit relates to tax years 2009 and 2010. The credit has not yet been authorized beyond the 2010 tax year. You may qualify for the Lifetime Learning Credit for any tuition and fees required for enrollment you pay after 2010.
The Lifetime Learning Credit
You cannot claim the tuition and fees tax deduction in the same year that you claim the American Opportunity Tax Credit or the lifetime learning credit. Qualifying higher education expenses such as tuition and fees you paid for yourself, a spouse, or a dependent may be deductible. Up to $4,000 of these expenses can be deductible as an adjustment to income depending on your adjusted gross income.
TheTuition and Fees Deduction