Two credits are allowed for college education: the Hope Credit and the Lifetime Learning Credit.
Either can be claimed by the taxpayer, his spouse, or his dependent for whom exemptions can also be claimed.
The Hope Credit for allowable expenses can be claimed only for the first two years, the student must be studying a degree program with at least half a full load in an eligible institution, and the claimable expenses only up to $1,650 per student.
The Lifetime Learning Credit grants $2,000 per year regardless of the student's load or number of years of study.
To qualify, the taxpayer's modified adjusted gross income (MADI) should be lower than $57,000 for single, head of household or widow/er filer, and $110,000 for spouses filing jointly.
Married taxpayers filing separately may not claim the credits.
The subject student must be enrolled in a qualified institution.
An eligible institution is any accredited public, private, non-profit college or university, vocational or postsecondary school qualified to establish a student aid program.
Creditable expenses include the required tuition and other fees paid at enrollment, but must be reduced at tax filing time by tax free assistance or scholarships received during the taxable year.
Room, board and living expenses are not eligible.
So are books and other school requirements except when preconditions of enrollment.
Sports, hobbies or games, unless part of a degree program, cannot be claimed as deductible expenses.
An alternative to education credits is the Tuition and Fees Deduction which provides a deduction of up to $4,000.
As an adjustment to income, it is non-itemized.
Furthermore, the MAGI requirement is higher at $80,000 (double for joint filers).
However, if the filer's MAGI is higher than $65,000 but below $80,000, the deduction is limited to $2,000.