The U.S, Government provides two tax credits that help many families offset some of the high costs of attending college. Unlike a deduction, a tax credit directly reduces the amount of tax you might owe. These credits can be claimed for expenses that include tuition, fees, books, supplies and equipment. The Lifetime Learning Credit allows families to claim up to $2,000 per student per year to help meet these expenses. There is no limit on the number of years this credit may be claimed. The American Opportunity Credit allows claims of up to $2,500 per student per year for the first four years of college.
Families can choose to apply only one of these credits for a specific child each year. It is important to note that there are income limits that must be met for each of these tax credits to be claimed. Please see https://studentaid.ed.gov/sa/types/tax-benefits for more information.
In addition to these tax credits, parents may also take a tax deduction for the interest paid on student loans for themselves or for a dependent. The maximum deduction is $2,500/year. There are income limits in effect for these deductions to be applied.
More information about these and other Federal programs can be found in the government publication available at https://www.irs.gov/pub/irs-pdf/p970.pdf.
