Tax Tip: Deduct up to $4,000 in Tuition on Your 2007 Return

The IRS offers three main benefits for individuals and families that paid tuition in 2007. Unfortunately, you have to pick one of the three for each child, as opposed to combining them in any one year.

The main education tax benefits are:

• A $4,000 Tuition and Fees Deduction.
• A $1,650 Hope Scholarship Tax Credit for freshman and sophomore year.
• A $2,000 Lifetime Learning Credit for all other years of attendance.

Here's a quick look at the first of these, the Tuition and Fees Deduction:

• You can deduct tuition and mandatory educational expenses at your school.
• You cannot deduct room and board, health fees, or insurance.
• The maximum deduction is $4,000, but may be reduced to $2,000 or $0 depending on your income.
• The Tuition and Fees Deduction is an "above the line" deduction, so you can claim it even if you don't itemize your other deductions on your return.

For more information on this deduction, as well as links to the relevant IRS Publications, check out my recent article on deducting college tuition.

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