Separate itrs for husb/wife..but what about school fees?

Dear Friends,

My wife and I are self-employed and our respective earnings tracked against our individual PANs.  I could use your guidance in deciding:

1) Can we combine our incomes into one IT Filing?  If so which ITR should we use?

2) If we cannot, then which ITR should we use (we have used ITR1 last year for separate filings..is that OK?)

and if we do file separate returns then how do we individually take advantage of deductions for 80(c) like School fees etc?  split them in half?

Thank you friends