Two tax credits that can help you offset the cost of higher education are the American opportunity credit and the lifetime learning credit.
You may be able to take a credit of up to $2,500 for qualified education expenses for each student who qualifies for the American opportunity credit. This credit equals 100% of the first $2,000 and 25% of the next $2,000 of qualified expenses paid for each eligible student. Up to $1,000 of the credit may be refundable.
The amount of your credit is gradually reduced (phased out) if your modified adjusted gross income (MAGI) is between $80,000 and $90,000 ($160,000 and $180,000 if you file a joint return). You cannot claim a credit if your MAGI is $90,000 or more ($180,000 or more if you file a joint return).
If you do not qualify for the American opportunity credit, you may be able to take a credit of up to $2,000 for the total qualified education expenses paid for yourself, your spouse, or your dependents enrolled at an eligible education institution. The credit is equal to 20% of your out-of-pocket expenses up to a maximum of $10,000 in expenses.
The amount of your credit phases out over a MAGI range of $53,000 to $63,000 ($107,000 to $127,000 if you file a joint return). No credit is available if your MAGI is $63,000 or more ($127,000 or more if you file a joint return).