Deductions & credits

contributions to a 401k will lower your adjusted gross income and reduce your taxes.  The tradeoff is that you generally can not withdraw the money until you are over 59.5 without a 10% penalty (there are a few exceptions to that rule, but let's not go there).

 

your adjusted gross income (line 11) needs to be below $180,000 to be eligible for the college tax credits.  And as long as the qualified educational expenses exceed any scholarships by at least $4000, you should be eligble for a $2500 tax credit (Look at form 1098-T  - box 1 and box 5)

 

everyone's tax situation is different so it is hard to provide an opinion.