As you prepare your 2002 tax return, keep the “higher education deduction” in mind. This is a brand new deduction for 2002; you do not have to itemize to take advantage of this deduction.
The higher education deduction has no phaseout range. If your 2002 adjusted gross income (AGI) was $130,000 or less, or less than $65,000 as a single filer, you can deduct up to $3,000 spent on tuition and fees. If you’re over the limit, you get no deduction. The same rules hold for 2003. By contrast, the Hope Scholarship and Lifetime Learning credits have complicated phaseout rules. Still, this higher education deduction is not without complications. Your deduction may be reduced if you claimed tax breaks related to:
Moreover, the deduction cannot be taken in the same year for the same student for whom the Hope or Lifetime Learning credit is claimed.