<p>versus tax credit. I have three kids in college - if I take the tuition and fees deduction my AGI is lowered by $12K and my kids are eligible for small Pell grants. If I take the American Opportunity Credit I get $3000 off my taxes. Which is better for me to do?</p>
<p>wow - I didn’t realize the tuition deduction would lower your AGI. I just went into turbotax and switched mine to test it - it would lower the AGI by $4000 or give me a $1000 credit. Sorry, i can’t answer your question on which is best for you. I’m going to leave mine alone (took the $1000 credit) because I already filed my return, but I will sure look at it closer next year.
Can you put the new AGI into FAFSA and see the Pell grants? I guess if the two
of them add up to more than $3000, then go for it. I am definitely not a tax expert
and new to the college financial aid.</p>
<p>The maximum tuition and fees deduction is $4000</p>
<p>^^^Yes. As Hoosiermom said the maximum tuition and fees deduction is $4000. It is a per tax return deduction, (unlike the credit which is per student).</p>
<p>So the most you can reduce your AGI by is $4000, not $12,000.</p>
<p>So in theory someone could take the tuition and fees deduction and qualify for a zero EFC or the Simplified Needs Test when they would not have qualified otherwise. Right?</p>
<p>If the person meets the other criteria for the Simplified Needs test (I copy and pasted thefollowing from another thread):</p>
<p>When you fill out the FAFSA there will be a series of qualifying questions which will then determine whether you qualify for the Simplified EFC formula or not. Having an AGI under $50K is one of the qualifications, but your parents must also meet another qualifier. The qualifiers are being eligible to file 1040A or EZ; a household member qualified for a federal means tested benefit (food stamps, TANF, reduced/free school lunches) within the past two years; or one parent being a dislocated worker. If your answers indicate that you would qualify, the asset questions will be optional for FAFSA (although your state may require you answer them to receive any state aid).</p>