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With tax credits, compare apples to oranges

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in Small Business Tax,Small Business Tax Deduction Strategies

If you claim the tuition deduction for a student, you can’t claim the American Opportunity Tax Credit (AOTC) or the Lifetime Learning Credit (LLC).

Strategy: Compare the tax savings. Usually, you’ll come out ahead with a credit, which reduces your tax bill dollar-for-dollar.

For instance, if you’re a joint filer and have an AGI of $100,000, you’ll be able to claim an AOTC of up $2,500 on your 2017 return. In comparison, the $4,000 tuition deduction is worth only $1,000 to you if you are in the 25% tax bracket—or $1,500 less.

Tip: The AOTC and LLC are both subject to income phase-outs.

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