The American Opportunity Credit, Lifetime Learning Credit or the Tuition and Fees Deduction may help offset the cost of higher education for you, your spouse and your dependents.
The amount of these credits and deductions are based on the qualified education expenses, such as college or vocational school tuition and enrollment fees, that you paid during the year and may be limited by your modified adjusted gross income. Items such as insurance, personal living expenses, and room and board are not considered qualified education expenses.
- The American Opportunity Tax Credit can be claimed for tuition and certain fees you pay for higher education in 2019. The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act extended the American Opportunity Tax Credit through 2019.
- The Lifetime Learning Credit, which is up to a $2,000 tax credit per tax return, applies to undergraduate, graduate and professional degree courses and there is no limit to the number of years you can take this credit.
- The Tuition and Fees Deduction (now available for tax years after 2017)- which is up to a $4,000 deduction from your income, applies to undergraduate, graduate and professional degree courses. This deduction may be beneficial as the modified adjusted gross income limits are higher than the thresholds for the American Opportunity Tax and Lifetime Learning Credits.
Are you paying Student Loan interest? You may be able to deduct up to $2,500 from your income per tax return. Student Loan interest may be deducted even while your student is in school if you are paying the interest immediately rather than deferring the payments.
You cannot claim the American Opportunity Tax Credit, Lifetime Learning Credit and the Tuition and Fees Deduction for the same student in the same year. You will want to choose the credit or deduction that provides the greatest benefit. However, you can claim the Student Interest Loan deduction and one of these other benefits simultaneously.