Higher education in America is not cheap; depending on your circumstances, you might graduate with a big student loan.
However, you might be eligible for programs that offer deductions for tuition and other fees as you file your tax returns. Note that the tax code includes education tax credits for expenses in higher education.
What are the Available Tuition and Fees Deduction?
The college tuition and fees deduction has been no longer available since December 31, 2020. However, other programs, such as the American Opportunity Tax and Lifetime Learning Credit, can still help you fund your college education.
For the 2023 fiscal year, students can use the American Opportunity Tax Credit and Lifetime Learning Credit to help fund their college education. (Photo: The Motley Fool)
See: Understanding College Acceptance and Financial Aid Award Letters 2023
American Opportunity Tax Credit
An eligible student can claim up to $2,500 tax credit – calculated as 100% of the first $2,000 in costs and 25% of the next $2,000 in college costs. The credit can be used for tuition, fees, and other course materials (books, equipment, and supplies).
Lifetime Learning Credit
This credit allows the student to claim up to $2,000 per tax return in eligible educational expenses. This money is nonrefundable, but you can reduce the amount of taxes you owe.
To qualify, you should be enrolled in an accredited college or university. If you are single, head of household, or widowed, your modified adjusted income should be less than $60,000. But, if you’re married and filing jointly, the modified adjusted gross income should not exceed $130,000. You are not eligible for this credit if you are married and filing separately
Note you cannot claim the American Opportunity and Lifetime Learning credits simultaneously.
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