Tax Credits for Single Students
Uncle Sam encourages higher eduction by offering single students the American Opportunity Credit and Lifetime Learning Credit for qualified tuition and related expenses. You may also qualify for a tuition deduction for yourself, your spouse or your dependent. You must enroll in an institution of higher learning to qualify for the credit or claim a deduction.
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American Opportunity Credit
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The American Recovery and Reinvestment Act (ARRA) provides a tax credit through the American Opportunity Credit to help pay for college expenses. The American Opportunity Credit modifies the Hope Credit for the 2009 and 2010 tax years. You receive a maximum credit of $2,500 if your adjusted modified income is $80,000 or less as a single tax filer and $160,000 for married couples jointly. Because of the higher income limits, the American Opportunity Credit is available to many more parents and students.
Lifetime Learning Credit
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Unlike the Hope Scholarship Credit, the Lifetime Learning Credit does not require you to enroll at least part-time. You may take one class at a community college and still qualify for the credit as long as the institution is an eligible educational institution. You may claim the credit for yourself, your spouse or a dependent. The Lifetime Learning Credit is 20 percent of your out-of-pocket expenses. As of the date of publication, you qualify for the credit if your modified adjusted income is less than $50,000 or $100,000 if filing a joint tax return with your spouse.
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Deductions
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If your income is too high and you cannot claim the Hope Scholarship Credit or Lifetime Learning Credit, you can elect to take a college tuition tax deduction. You may claim a deduction even without itemizing your income tax return. You must be a student and pay tuition or course fees to a qualified learning institution. The school you chose to attend can tell you if it is an eligible educational institution.
One at a Time
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As a single student, you cannot claim the American Opportunity Credit and Lifetime Learning Credit in the same year. Claiming a credit is more favorable than a deduction because it represents a direct credit against the taxes owed. Consult with a tax professional If you are not sure whether you qualify for an educational credit or deduction.
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