What Kinds of Deductions Are There for College Tuition?
There is more than one tax deduction available for higher education or job skill improvement courses. The reason for the different types of deductions is to allow you to qualify for some type of credit regardless of your student status or of the college or course you attend. You can take one of these deductions for yourself, a dependent or a spouse. However, you can't take more than one deduction for each student. For these deductions you don't need to keep a list of itemized deductions and receipts, as it is a global deduction amount based upon your income level.
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College Tuition Deduction
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You can deduct up to a total of $4,000 in college tuition and fees you paid for your spouse or anyone you claim as a dependent on your tax return, providing they are enrolled in an eligible higher education university or college at least half time. The only expenses that qualify for this deduction are college tuition fees and those required to enroll or attend college or university classes. Other expenses may include book, student health fees and other tuition expenses. The attended university or college reports the qualifying expenses both to you and to the Internal Revenue Service through Form 1098-T.
Lifetime Learning Credit
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The Lifetime Learning Credit is a maximum $2,000 total deduction available to taxpayers for tuition and related expenses in an eligible higher educational institution -- this includes courses that improve job skills. The taxpayer may take this credit if the expenses were paid for his education or that of a dependent or spouse. But like the college tuition deduction, the total amount of the deduction is a maximum of $2,000 regardless of the number of students in the family. A taxpayer can take the lifetime learning credit for a student not claimed in the college tuition deduction or if the expenses do not fall under the college tuition deduction eligibility requirements, but he may not take both credits for the same student in the same year.
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American Opportunity Credit
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This is a maximum credit of up to $2,500 for undergraduate students and is available until 2012. It is for qualifying educational expenses, including tuition and course material. But unlike the other college tuition credits, up to $1,000 of the credit can be refunded to you, meaning you can get this amount of refund even if your tax liability is zero.
Eligibility
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Eligibility for any of the educational tax credits requires that a person pay for college tuition for themselves, a dependent or a spouse. However, not all taxpayers can take the full deduction, as it is regulated by the amount of income you make. An unmarried person with an adjusted gross income above $65,000 or a joint filer with $130,000 are entitled to a smaller credit amount than the maximum level for those who make less than these amounts. Single filers with income levels above $80,000 or joint filers with incomes at $160,000 or more are ineligible for this deduction.
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References
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