There are a variety of tax incentives available in 2009 and 2010 to assist taxpayers with the expense of higher education:

• American opportunity tax credit: Credit of up to $2,500 per eligible student per year for qualified tuition and related expenses (now includes required course materials such as books). The credit may be claimed for the first four years of the student's post-secondary education. The full credit is available to individuals with modified adjusted gross income (MAGI) of $80,000 or less ($160,000 for joint filers). Taxpayers with MAGI greater than $90,000 ($180,000 for joint filers) cannot benefit from this credit. Other qualifications apply.
• Lifetime learning credit: Credit of up to $2,000 ($4,000 for students in Midwestern disaster areas) per eligible student per year for qualified education expenses. There is no limit on the number of years that this credit can be claimed for each student. Taxpayers with MAGI more than $50,000 ($100,000 filing jointly) cannot claim this credit. Other qualifications apply.
• Tuition and fees deduction: Reduces taxable income by up to $4,000, even if the taxpayer does not itemize. The requirements are the same as the lifetime learning credit, but a taxpayer cannot take the deduction if his/her filing status is married filing separate or if another person can claim he/she as a dependent, even if this person does not actually claim that exemption. Other qualifications apply.

Taxpayers cannot claim both the American opportunity credit and the lifetime learning credit for the same student in one year. Therefore, the lifetime learning credit is more beneficial for graduate students, students taking only one course, or those not pursuing a degree. Additionally, a taxpayer cannot claim the tuition and fees tax deduction in the same year as either of the above credits.