The Internal Revenue Service has several programs that give students a tax deduction or credit as of 2012. The program for which you are eligible may vary based on your personal circumstances, the person who is attending college and the amount of time that you are in college. Some programs give students an actual tax refund when they pay tuition. Other programs reduce the amount of the students' taxable income, which may lead to a tax refund based on the student's particular circumstances and tax return.
Tuition and Fees Deduction
The Tuition and Fees Deduction reduces the filer's taxable income by up to $4,000. If you, your spouse or your dependent has paid tuition for the previous school year, you may be eligible for this deduction. Your adjusted gross income can't be more than $80,000 if you are filing single or $160,000 if you are filing a joint return as of 2012. You can't use this deduction if you file married filing jointly or if someone else claims you as a dependent.
American Opportunity Tax Credit
Thw American Opportunity Tax Credit provides you with up to $2,500 for four years of postsecondary education per eligible student. The student must be you, your spouse or your dependent, and he or she must be enrolled at least half time in a degree-seeking program. You can't claim the credit if you file married filing separately or if you are a dependent on someone else's tax return. You can't claim the credit if your modified adjusted gross income is more than $90,000 if you are filing single or $180,000 if filing a joint return. If you don't owe any tax, you can receive an annual payment of $1,000 per year per eligible student.
Lifetime Learning Credit
The Lifetime Learning Credit may be suitable to students or parents of students who take more than four years to complete a degree. This credit provides a tax deduction of up to $2,000 if your eligible lifetime learning expenses are $10,000 or more. You can combine your expenses and your child's, if applicable, to reach this figure. Expenses for bachelor's, graduate and professional degree programs are eligible for the credit. You can't claim the credit if your adjusted gross income is more than $51,000 and you file single or if it is more than $102,000 on a joint return.
Student Loan Interest Deduction
The Student Loan Interest Deduction can decrease your tax liability by up to $2,500 of the amount of interest that you paid on student loans. You can't use this deduction if you file married filing jointly or if someone else claims you as a dependent. Your modified adjusted gross income can't be more than $75,000 if filing single or $150,000 if filing a joint return.
You can usually only take one type of deduction or credit per year. You can choose the option that gives you the least amount of tax. You usually can't take advantage of these programs if a scholarship, grant, fellowship, Coverdell education savings account or employer paid tuition on your behalf. If your dependent is a high school student who is taking classes for college credit, you may be able to use these deductions or credits as long as you meet the other eligibility criteria.
- Internal Revenue Service: Tuition and Fees Deduction
- Internal Revenue Service: Hope and Lifetime Learning Educational Credits
- Internal Revenue Service: Topic 457 -- Tuition and Fees Deduction
- Bankrate: Tax Credits Help With Higher Education
- Internal Revenue Service: Topic 456 -- Student Loan Interest Deduction
Samantha Kemp is a lawyer for a general practice firm. She has been writing professionally since 2009. Her articles focus on legal issues, personal finance, business and education. Kemp acquired her JD from the University of Arkansas School of Law. She also has degrees in economics and business and teaching.