With college costs as high as they are, don't miss out on any of the valuable tax breaks that you may qualify for.
Maximum Deduction Amount
For 2013, a $4,000 "above the line" deduction for college tuition and mandatory enrollment fees paid for you, your spouse or anyone claimed as a dependent on your return. No deduction is allowed for expenses of any person who can be claimed as a dependent on someone else's return. So your dependent college-age child can't claim the deduction when your own AGI is too high to qualify. The $4,000 annual limit applies no matter how many students are in your family. This break is scheduled to expire at the end of 2013, but it will probably be renewed for 2014 under the same rules explained here.
College tuition and mandatory fees.
$65,000 (single); $130,000 (married filing jointly); For singles with AGI between $65,001 and $80,000 a reduced deduction of up to $2,000 is allowed; For married couples filing jointly with AGI between $130,001 and $160,000 a reduced deduction of up to $2,000 is allowed; not available for those who are married but file separately.
No deduction can be claimed for expenses paid with tax-free withdrawals of earnings from a 529 Qualified Tuition Plan (QTP) or Coverdell Education Savings Account (CESA). No deduction is allowed for years when the American Opportunity or Lifetime Learning Credit is claimed for the student in question.
American Opportunity Credit
Max. Credit Amount
Up to $2,500: 100% of the first $2,000 of qualified tuition plus 25% of the next $2,000. Credit is taken per student, not per return.
Expenses relating to the first four years of college only. Expenses include tuition and fees, such as course-related books, supplies and equipment. Cannot be used for room and board costs.
The credit is phased out for singles with AGIs between $80,000 to $90,000; married filing jointly, $160,000 to $180,000. Credit is not available for those who are married but file separately.
Can only be claimed for four years of undergraduate education per student. Student must be enrolled at least half the time for at least one academic period during the year. Cannot be used during same year you claim Lifetime Learning Credit for a particular student.
Lifetime Learning Credit
Max. Credit Amount
Twenty percent of qualifying tuition and mandatory fees up to $10,000 for a maximum credit of $2,000 annually. Only one Lifetime Learning credit is allowed per return, even if your family has several students.
Twenty percent of qualifying tuition and mandatory fees, as well as course-related books, supplies and equipment (but only if they are required to be purchased directly from the school). Expenses for graduate work are allowed. Cannot be used for room and board costs.
For 2013, credit is phased out for singles with AGI between $53,000 to $63,000; married filing jointly, $106,000 to $127,000. Credit is not available for those who are married but file separately.
Cannot be used during same year you claim American Opportunity credit for a particular student. Unlike the American Opportunity credit, there are no degree or workload requirements for eligibility.
Student-Loan Interest Deduction
Max. Deduction Amount
Qualified education loans for you, your spouse or anyone you claim as a dependent. Loans can include those that have been refinanced and consolidated.
For 2013, deduction is phased out for singles with AGI of $60,000 to $75,000; married couples filing jointly, $125,000 to $155,000. Deduction is not available for those who are married but file separately.
No deduction is allowed if you are claimed as a dependent on someone else's taxes. Loans cannot include educational expenses covered by a Coverdell ESA or an employer educational assistance program.