Susan E. Thomas CPA
Newsletter
Comparison of Education Tax Credits and Deductions

  American Opportunity credit Lifetime Learning credit Student loan interest deduction Deduction for qualified higher education expenses
Credit/deduction applies to Qualified tuition and related expenses for first four years of undergraduate education Qualified tuition and related expenses for courses taken throughout lifetime to improve or acquire job skills Interest paid on a qualified student loan Qualified higher education expenses paid during the year
Qualified education expenses include room and board? No No Yes No
Maximum credit/deduction $2,500
$2,000
$2,500
$4,000 (full)
$2,000 (partial)
Income limits on who is eligible to take credit/deduction

Single filers: full credit available if modified adjusted gross income (MAGI) $80,000 or less (same in 2012)

Partial credit available if MAGI between $80,000 and $90,000 (same in 2012)

Joint filers: full credit available if MAGI $160,000 or less (same in 2012)

Partial credit available if MAGI between $160,000 and $180,000 (same in 2012)

Single filers: full credit available if modified adjusted gross income (MAGI) $53,000 or less ($52,000 in 2012)

Partial credit available if MAGI between $53,000 and $63,000 ($52,000 and $62,000 in 2012)

Joint filers: full credit available if MAGI $107,000 or less ($104,000 in 2012)

Partial credit available if MAGI between $107,000 and $127,000 ($104,000 and $124,000 in 2012)

Single filers: full deduction available if modified adjusted gross income (MAGI) $60,000 or less (same in 2012)

Partial deduction available if MAGI between $60,000 and $75,000 (same in 2012)

Joint filers: full deduction available if MAGI $125,000 or less (same in 2012)

Partial deduction available if MAGI between $125,000 and $155,000 (same in 2012)

Single filers: $4,000 deduction available if modified gross income (MAGI) $65,000 or less (same in 2012)

$2,000 deduction available if MAGI between $65,000 and $80,000 (same in 2012)

Joint filers: $4,000 deduction available if MAGI $130,000 or less (same in 2012)

$2,000 deduction available if MAGI between $130,000 and $160,000 (same in 2012)

Less than half-time students or graduate students eligible? No Yes Less than half-time--no; graduate students--yes Yes
Limit on number of students in family for whom credit/deduction can be taken in same year? No Yes, annual credit is limited to $2,000 per tax return No; if applicable, parents can claim the deduction for more than one child in the same year No; if applicable, parents can claim the deduction for more than one child in the same year
Credit/deduction available in same year as tax-free distribution from a Coverdell education savings account? Yes Yes Yes Yes, but qualifying expenses are reduced by Coverdell ESA distributions. Also, deduction is not available in a tax year in which American Opportunity or Lifetime Learning credit is taken for the same student.
Must student be enrolled for a degree or in other program leading to an educational credential? Yes No Yes No
Allowed if student has a controlled substance conviction? No Yes Yes Yes


Prepared by Broadridge Investor Communication Solutions, Inc, Copyright 2011