College and Taxes: 4 Tax Breaks That Can Counter High College Costs

Dear College Made Simple reader,

To quote a CPA friend of mine: “You wouldn’t believe the tax breaks I get parents with kids who have a .edu e-mail address!”

He was, of course, referring to how much tax money parents were getting back as a result of having children in college.

There are four main tax breaks for the 2011 tax year that go a long way to combat skyrocketing college costs. Here they are and how you may qualify for them. (Keep in mind – this is for informational purposes only and is by no means tax advice. Remember to consult a professional tax advisor for your own specific financial situation.)

– Scott

4 Tax Breaks That Can Counter High College Costs

College Tax Break #1: College Education Deduction

With the College Education Deduction, you can deduct a maximum of $4,000 for college tuition and mandatory fees paid for you, your spouse or anyone you claim as a dependent. It’s a one-time deduction, meaning you can only make one deduction no matter how many students are in your family. In addition, if you paid tuition and expenses toward your son and daughter’s education, they cannot make this deduction.

The $4,000 maximum deduction applies to adjusted gross incomes (AGI) of $65,000 if filing as single taxpayer, or $130,000 if filing jointly as married. The maximum deduction is reduced to $2,000 for singles with an AGI between $65,001 and $88,000, and for married couples with an AGI between $130,001 and $160,000.

Finally, this deduction cannot be made in conjunction with the American Opportunity Credit or Lifetime Learning Credit.

College Tax Break #2: American Opportunity Credit.

The American Opportunity Credit allows you to claim up to $2,500 in deductions per student. How it works is fairly simple.

To get the maximum of $2,500, you’d first have to claim 100% of the first $2,000 in expenses, and 25% of the next $2,000.

The expenses are more specific, however. They can be used for tuition, fees, books, supplies and equipment. They cannot include room and board costs. Also, the deducted expenses can only be from the first four years of college.

The American Opportunity Credit is available for families with an AGI under $160,000 and singles with an AGI under $80,000. It’s not available for those who are married but file separately.

Finally, the American Opportunity Credit can’t be claimed if you already claimed the Lifetime Learning Credit for another student.

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College Tax Break #3: Lifetime Learning Credit.

The Lifetime Learning Credit allows a $2,000 maximum credit, which is given as a result of 20% of $10,000 spent in tuition and mandatory fees. Books, supplies and equipment can also count only if they are purchased from the school. Room and board costs cannot be included.

This credit is available for single taxpayers with an AGI below $50,000 and married joint filers with an AGI under $100,000. Only one credit is allowed per return, and it can’t be used in congruence with the American Opportunity Credit.

What also sets the Lifetime Learning Credit apart from other tax breaks is that it covers expenses from graduate studies. Also, there aren’t workload or degree requirements, meaning that it covers part-time, full-time and “career students.”

College Tax Break #4: Student Loan Interest Deduction.

You don’t have to be in college to qualify for a college-related tax break.

The Student Loan Interest Deduction allows you to claim a maximum of $2,500 for interest paid on qualified student loans.

Unlike some other deductions, the Student Loan Interest Deduction doesn’t require you to itemize of expenses. The deduction is claimed as an adjustment.

To qualify, your modified AGI has to be less than $60,000 for single tax filers, less than $120,000 for married taxpayers filing jointly. You cannot be claimed as a dependent on somebody else’s return.

To your college admissions and funding success,

Scott Weingold

Co-Founder, College Planning Network LLC

Publisher, – The free educational resource of College Planning Network


Related Articles:

College Tuition Discounts

5 Ways to Pay for College in Tough Times



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Editor's Note: Scott Weingold has been ranked the #1 “College Financial Aid Expert Worth Knowing About” in the entire country by  He has co-authored the book, “The Real Secret To Paying For College. The Insider’s Guide To Sending Your Child To College – Without Spending Your Life’s Savings.” Scott also publishes a popular free online newsletter, “College Funding Made Simple" which reveals insider’s tips, methods, and strategies for beating the high cost of college.

Scott is the co-founder and a principal of the widely renown College Planning Network, LLC – the nation’s largest and most reputable college admissions and financial aid planning firm. CPN is a proud member of the Better Business Bureau, the National Association of College Funding Advisors, the National Association for College Admission Counseling, the National Association of Student Financial Aid Administrators and the Student Affairs Administrators in Higher Education.

Scott, along with his college funding advisory team, helps thousands of families throughout the country with their college planning needs and offers a series of free educational webinars and workshops on “How To Pay For College Without Going Broke In The Process!” He's been featured or mentioned in The Philadelphia Inquirer, Yahoo News,, Voice America with Ron Adams, Crains Cleveland Business, and on Cleveland Connection with James McIntyre.  Scott has published numerous articles and is a professional speaker who has addressed thousands of audiences online and offline throughout the United States.  His actionable insights and candid, open approach have earned him & his team numerous media interviews, citations, and speaking opportunities, and his free online video workshop is one of the Internet’s most widely viewed pieces in the college funding space.