Post-secondary education -- such as college, graduate school or trade school -- can take a bite out of your budget. Thankfully, the Internal Revenue Service offers several tax deductions and credits you can claim to offset the costs. The amount of tuition you can claim depends on which deduction or credit you claim on your income taxes.
Income and Filing Restrictions
To claim your tuition on your taxes, you cannot be claimed as a dependent by another person on her income tax return. For example, if your parents claim you as a dependent, you cannot claim your tuition on your taxes. You also cannot claim tuition if you are married but file separate returns. The IRS prohibits you from claiming more than one tax benefit for your tuition, so you should claim the credit that gives you the largest benefit.
Tuition and Fees Deduction
The IRS limits the tuition and fees deduction to no more than $4,000 of tuition. This is a tax deduction, so it lowers your taxable income rather than directly lowering your taxes due. Your modified adjusted gross income (MAGI) cannot exceed the annual limits for your filing status. As of the 2010 tax year, you cannot claim the tuition and fees deduction if your MAGI exceeds $160,000 for joint filers or $80,000 for single filers.
Lifetime Learning Credit
The IRS allows you to count up to $10,000 of tuition toward figuring the Lifetime Learning Credit. The credit equals 20 percent of your higher-education expenses for a maximum credit of $2,000. Since it is a credit rather than a deduction, it directly reduces your taxes due. Your modified adjusted gross income (MAGI) cannot exceed the annual limits for your filing status. You cannot claim the Lifetime Learning Credit if your MAGI exceeds $120,000 for joint filers or $60,000 for single filers.
American Opportunity Credit
The IRS allows you to count up to $4,000 of tuition toward figuring the American Opportunity Credit. The credit equals 100 percent of your first $2,000 of tuition and 25 percent of the next $2,000, for a maximum tax credit of $2,500. Even though the tuition you can claim is smaller than with the Lifetime Learning Credit, the maximum tax credit is larger. However, you can only claim the American Opportunity Credit for the first four years of post-secondary education and only if you are a degree-seeking student. Your modified adjusted gross income (MAGI) cannot exceed the annual limits for your filing status. You cannot claim the American Opportunity Credit if your MAGI exceeds $180,000 for joint filers or $90,000 for single filers.
Based in the Kansas City area, Mike specializes in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."