- The tuition and fees deduction can be taken as an adjustment on your income taxes, which means you can claim the deduction even if you don't itemize on your tax return. The deduction is worth up to $4,000 (as of February 2011). You can only claim amounts paid for tuition and fees --- you cannot claim for room and board, books or supplies. In addition, the tuition and fees must have been paid for you, your spouse or your dependent.
- You can't claim the tuition and fees deduction if you are married filing separately, if someone else can claim you as a dependent on his tax return or if your modified adjusted gross income is over $80,000 for singles or $160,000 for those taxpayers filing a joint return (as of February 2011). In addition, you can't claim the credit if you claim an American Opportunity or lifetime learning credit for the same student you are claiming the tuition and fees deduction for.
- The American Opportunity Tax Credit is up to $2,000 (as of January 2011). Eligible expenses you can apply toward the credit include tuition and fees; you cannot claim for the costs of room and board with the American Opportunity Credit. The credit is designed to assist undergraduate students so can only be claimed for four tax years in a row. To be eligible to take the deduction, the student must carry either a full- or half-time course load.
- If you've taken out student loans to pay for college, you may be feeling the pinch of those burdensome student loan payments. With student loans commonly reaching into the tens of thousands of dollars, interest payments can mount up. The IRS recognizes this and gives taxpayers a break with the student loan interest deduction. The deduction can be worth up to $2,500 in interest charges. The deduction is phased out for single taxpayers who earn $60,000 to $75,000 and for joint filers who earn between $120,000 and $150,000. (Amounts are as of February 2011.)
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