Get All Your Tax Benefits for College Costs

NEW YORK ( TheStreet) -- The U.S. tax code contains several ways to claim a tax benefit for the cost of "post-secondary" education for you, your spouse or your dependent children.

The most generous is the American Opportunity Credit , an enhanced version of the former HOPE Credit. You can claim 100% of the first $2,000 of qualified expenses and 25% of the next $2,000, for a maximum of $2,500. Qualified expenses include tuition and fees and required course materials such as books, supplies and equipment. To get the maximum credit you must have at least $4,000 in qualified expenses. Forty percent of the credit, a maximum of $1,000, may be refundable.

The credit is phased out based on your "modified" Adjusted Gross Income. The phase-out range is MAGI of between $80,000 and $90,000 for single taxpayers and $160,000 and $180,000 for joint filers. No credit is allowed if you are married filing separate returns.

A student must be enrolled in a program that leads to a degree, certificate or other recognized credential at an accredited educational institution and have taken at least half the normal full-time workload for at least one semester during the year. A student cannot have a felony drug conviction.

The AOC is limited to the first four years of post-secondary education and cannot be claimed in more than four tax years. If you claimed either a HOPE or American Opportunity Credit for the same student in 2008-11 you cannot claim the AOC for that student for 2012.

The Lifetime Learning Credit , none of which is refundable, is available for all years of post-secondary education, including graduate school, and for courses to acquire or improve job skills. The student does not have to be pursuing a degree or other recognized education credential, and it is even available for a single class. There is no limit on the number of years you can claim this credit for a student. The cost of course materials cannot be used in calculating the Lifetime Learning Credit.

The amount of the credit is 20% of the first $10,000 in qualified expenses, for a maximum of $2,000. The phaseout range is for MAGI of between $52,000 and $62,000 for singles and $104,000 and $124,000 for married couples. It is not available to married taxpayers who file separately.

The American Opportunity Credit's $2,500 maximum is per student, but the Lifetime Learning Credit's $2,000 maximum is per tax return. You can have two dependents in college during the year, and each can claim an AOC of $2,500. But if you have two dependents in graduate school in the same year the maximum Lifetime Learning Credit you can claim on your Form 1040 for both combined is $2,000.