How Can I Benefit from Tax Credits and Deductions for Higher Education Expenses?
The Tuition and Fees Deduction, a.k.a. the new Higher Education Deduction, became effective in 2002, joining two existing education credits — the Hope Scholarship credit and the Lifetime Learning credit. Typically, tax credits are more beneficial than tax deductions because credits provide a dollar-for-dollar reduction of your taxes owed. Deductions reduce the amount of your taxable income and, therefore, the actual benefit depends on the taxpayer’s tax bracket (either 10, 15, 27, 30, 35 or 38.6 percent). The following chart summarizes the new education deduction as well as the existing education credits.
