American Opportunity Credit

• The American Opportunity Credit replaces the Hope Credit for the 2010 tax year. The American Opportunity Credit provides a credit of up to $2,500 for qualified education expenses per student. You may claim the American Opportunity Credit if you paid the education expenses of a qualified student who attended school during the 2010 school year and/or the first three months of 2011. A qualified student is either yourself, your spouse or your claimed dependent. Additionally, in order to claim the American Opportunity Credit, your modified adjusted gross income must be less than $90,000 (or $180,000 if filing married filing jointly), and you cannot claim the Lifetime Learning Credit or any tuition and fees deduction for the same student.
  
  

Lifetime Learning Credit

• The Lifetime Learning Credit is equal to 20 percent of the first $10,000 of qualified educational expenses and can be claimed for any number of years. The credit phases out for single, head of household or qualifying widow(er) filers whose adjusted gross income is above $60,000, and married couples filing jointly whose adjusted gross income is above $120,000. Like the American Opportunity Credit, a qualifying student is either yourself, your spouse or your claimed dependent, and you cannot claim the credit if you are using the married filing separately status or are claiming the American Opportunity Credit or the tuition and fees deduction.
  
  

Educational Expenses Deduction

• If you do not take either of the tax credits, you can claim the educational expenses deduction. You can take the deduction for educational costs you pay for yourself, your spouse or your dependents. The credit allows you to deduct up to $4,000 as an above-the-line deduction, meaning you can take it in addition to the standard deduction. Modified adjusted gross income requirements for the tuition and fees deduction is below $80,000 for a single, head of household or widow(er) filer, and below $160,000 for married filing jointly. Qualified expenses include tuition and fees but not the cost of room and board. To take this deduction, file your taxes using Form 1040 or Form 1040A, not Form 1040EZ.