Editor's Note: This article has been updated to reflect current programs and tax laws.
Did you know there are several ways to save on your taxes if you have qualified education expenses?
Depending on your income and your filing status you may be able to deduct thousands of dollars of education expenses from your income tax.
- The American Opportunity Credit provides up to a $2,500 credit per student for qualified tuition and fees paid during the first two years of higher education. The student must seek a degree and meet other requirements.
- The Lifetime Learning Credit is available for 20 percent of the first $10,000 of tuition expenses (up to a maximum of $2,000) per tax return for courses students take to acquire or improve job skills. Unlike the American Opportunity Credit, the Lifetime Learning Credit is available for an unlimited number of years, and students do not have to seek a degree to qualify for it.
- The Tuition and Fees Deduction is another way to defray educational costs. It allows you to deduct qualified college tuition and related expenses of up to $4,000. This deduction is an adjustment to income, which means the deduction will reduce the amount of your income subject to tax. The Tuition and Fees Deduction may be beneficial to you if you do not qualify for the American opportunity or lifetime learning credits.
NOTE: You can only claim one credit at a time.