Tuition Tax Benefits

Note: the following information was adapted from the IRS Web site. For complete details on the following tax benefits, refer to the IRS Web site or consult your tax advisor.  

Hope / American Opportunity Credit and Lifetime Learning Credit

There are two tax credits available to help you offset the costs of higher education by reducing the amount of your income tax. They are the Hope / American Opportunity Credit and the Lifetime Learning Credit.  

Who can claim these credits?

Generally, you can claim these credits if all three of the following requirements are met:

  • You pay qualified education expenses of higher education.
  • You pay the education expenses for an eligible student.
  • The eligible student is yourself, your spouse, or a dependent for whom you claim an exemption on your tax return.

Can you claim both education credits this year?

If you are eligible to claim both the Hope / American Opportunity Credit and the Lifetime Learning Credit for the same student in the same year, you can choose to claim either credit, but not both.   If you pay qualified education expenses for more than one student in the same year, you can choose to take credits on a per-student, per-year basis. This means you can claim the Hope / American Opportunity Credit for one student and the Lifetime Learning Credit for another student in the same year.

Comparison of Education Credits

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Required forms

  • 1098-T (provided by the college)
  • IRS Form 8863

Student Loan Interest Deduction

If your modified adjusted gross income is less than $70,000 ($145,000 if filing a joint return) there is a special deduction allowed for interest paid on a student loan.

The student loan interest deduction is taken as an adjustment to income. This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040).  

Student Loan Interest Deduction at a Glance

Do not rely on this table alone. See the IRS Web site for complete details.

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You can reduce your taxable income by up to $2,500.

Your student loan

  • must have been taken out solely to pay qualified education expenses, and
  • cannot be from a related person or made under a qualified employer plan.
The student must be you, your spouse, or your dependent
You can deduct interest paid during the remaining period of your student loan.

Required forms

  • 1098-E (provided by the lender)
  • IRS Form 1040, line 33 or 1040A, line

Tuition & Fees Deduction

The tuition and fees deduction can reduce the amount of your taxable income by up to $4,000. This deduction may be beneficial if you cannot take either the Hope / American Opportunity or Lifetime Learning Credit because of income limitations. Income limitations occur at modified AGI of $80,000 for single tax filers and $160,000 for married filing jointly. For students in Midwestern disaster areas, the definition of qualified education expenses is expanded to include books, supplies, room and board.

Who can claim this deduction?

Generally, you can claim the tuition and fees deduction if all three of the following requirements are met:

  • You pay qualified education expenses of higher education.
  • You pay the education expenses for an eligible student.
  • The eligible student is yourself, your spouse, or a dependent for whom you claim an exemption on your tax return.

Required forms

  • 1098-T (provided by the college)
  • IRS Form 8917

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