Studying is not easy especially when you are working to support your studies. That’s the reason why the Congress enacted 2012 tax relief for student called "college tuition tax credit" to encourage the students to continue their studying.

Here are the lists of Tax Credits:

The American Opportunity Tax Credit

•    is worth up to $2,500
•    for those single filers that income is less than $80,000 (partial credit for income between $80,000 - $90,000) and for joint filers that income is less than $160,000 (partial credit for income between $160,000 - $180,000).
•    the first $2,000 for qualified tuition and related expenses is 100%; and
•    the next $2,000 for qualified tuition and related expenses is 25%.
•    for parents claiming the dependent student or for student that is not claimed as a dependent
•    40% of the credit is refundable

Education Tax Credit is important and beneficial for both parent and student.

The Lifetime Learning Credit

•    is worth up to $2,000
•    for those single filers that income is less than $48,000 (partial credit for income between $48,000 - $58,000) and for joint filers that income is less than $96,000 (partial credit for income between $96,000 - $116,000).
•    the first $10,000 for qualified tuition and related expenses is 20%
•    for parents claiming the dependent student or for student that is not claimed as a dependent
•    can be used for college tuition at any level (part-time, also)

The Tuition and Fees Deduction

There are two options how you can claim this deduction. It’s either by education tax deduction or college tuition tax credit. But if you choose the education tax deduction instead of college tuition tax credit.

•    it is worth up to $4,000 off your income
•    for those single filers that income is less than $80,000 and for joint filers that income is less than $160,000.
•    for parents claiming the dependent student or for student that is not claimed as a dependent
•    it can only be used to tuition and fees, other expenses is not included (like room and board)

The college tax deduction is only used when the income is too high for higher education tax credit. While, school tax credit reduces the amount of taxes you paid and your income was reduced by education tax deduction.

FAQs regarding Federal College Tax Credits

The eligible Educational Institution – a school that participates to federal student aid program (which led by the U.S Department of Education) is eligible.

What college expenses are needed to claim the credit?

All expenses from enrollment or attendance in eligible school, like:

•    tuition
•    fees (if mandatory)
•    books (even if bought at the school store or not)
•    supplies that are necessary for a course of study
•    equipment that is necessary for a course of study
•    any expenses that the school mandates as a condition for attendance

What if the expenses are paid by college loans?

You may also take the credit – even if it is deferred until after the graduation. This is also applied to private student loans and to federal student loans.