If you are attending college, or have a college student in your household, the following is a brief summary of the various education credits and deductions that may be taken on your tax return:

If you qualify for the American Opportunity Credit (AOTC) this year, please be aware of a possible "refund hold" on the credit to verify attendance.

After the enactment of the refundable American Opportunity Credit, Treasury inspectors estimate tax filers erroneously received $3.2 billion in credits for 2009 and 2010. Inspectors found the IRS was doing a poor job of policing returns, which contained these educational credits. (See TTW#87 for a refresher on refundable vs. non refundable credits.)

Due to the late December passage of the 2010 Tax Relief Act, the IRS recently announced that some taxpayers will need to wait until mid-to late February to file their returns.

For the last several years you have had the choice of using the Hope Education Credit, the Lifetime Learning Credit, or the Tuition and Fees Deduction to help defray higher education expenses.tn_educationFor 2009, the new American Opportunity Credit will replace the Hope Credit for most taxpayers. The new credit has several advantages over the Hope Credit.