The tax law provides several tax benefits for people attending school. If you can take advantage of them, you are in effect receiving a government subsidy that lowers the cost of education.
The American Opportunity Tax Credit, the Lifetime Learning credit, the student loan interest deduction, and state-sponsored college tuition programs and Coverdell ESAs can provide substantial tax savings, but these tax benefit provisions are hedged with restrictions that may bar or limit their availability. If Congress extends it to 2012, the above-the-line deduction for higher education tuition and fees may be available if you do not claim an American Opportunity or Lifetime Learning credit.
33.2 Tuition Reductions for College Employees
33.3 How Fulbright Awards Are Taxed
33.4 United States Savings Bond Tuition Plans
33.5 Contributing to a Qualified Tuition Program (Section 529 Plan)
33.6 Distributions From Qualified Tuition Programs (Section 529 Plans)
33.8 American Opportunity Credit
33.10 Contributing to a Coverdell Education Savings Account (ESA)
33.11 Distributions From Coverdell ESAs
33.12 Tuition and Fees Deduction
33.13 Student Loan Interest Deduction
33.14 Types of Deductible Work-Related Costs
33.15 Work-Related Tests for Education Costs
33.16 Local Transportation and Travel Away From Home To Take Courses
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