If you’re paying to send a child to college, you may be able to claim either the American Opportunity or the Lifetime Learning tax credit. These credits can cut your tax bill by $2,000, $2,500, or more. Another alternative is to take the tuition and fees deduction, which can save you no more than $1,000 in tax.
Why would you take the tuition and fees deduction instead of a tax credit? That might be all you can claim. The deduction will be your choice if:
* Your child is not in his or her first four years of post-high school education;
* Your child is not on track for an undergraduate degree; or
* Your child is not going to school at least half-time.
Even if your youngster is in one of the above categories, you can take this deduction if you pay for tuition and related expenses at an accredited school, after high school. You can deduct up to $4,000 of expenses if your income is not more than $65,000, or not more than $130,000 if you’re married and file a joint return.
If your income is over $65,000 but no more than $80,000 (from $130,000 to $160,000 on a joint return), you can deduct up to $2,000 of expenses. The maximum $4,000 deduction can save you as much as $1,000 in tax.
