Tax and Tax Information - Tax Credits

Who is eligible for these tax credits? Anyone can claim these tax credits; you can claim these credits for yourself, your spouse and anyone you can legally claim as a dependant on your tax return.

The Hope Tax Credit is worth up to a maximum of $1,500, depending on how much the qualified educational expenses are, 100% of the first $1000 and 50% of the next $1000. To be eligible for The Hope Tax Credit the student need to be enrolled at least half time (6 credits) in at least one semester and meet certain income requirements. The Hope Tax Credit is available for each and every student, on the same tax return enrolled in a qualifying college program. This credit can be taken for the first two years of post secondary education (undergraduate degree or vocational school) for each student. A family with three students with qualified expenses of $2,000 each on the same return equals a $4,500 reduction in the taxes you owe.

The Lifetime Learning Tax Credit works a little bit differently, the credit is based on 20% of the of the first $10,000 of educational expense up to a maximum credit is $2,000 per return not per student. This credit can be taken for any and all years that a studennt takes even just one class that will improve or aquire job skills (undergraduate, graduate and professional degree courses included). If you have qualified expenses of $2,000 then you get a tax credit of $400 (.20 X $2,000).

Consider this, these tax credits can bring down the tax that you owe on April 15th, and money that you don't have to pay in tax can be used to pay for the education you want and deserve. Other limitations are that both of these tax credits may not be used for the same student in the same year. Students that have been comvicted of a felony drug offense can not claim the Hope Tax Credit, but they can still take advantage of the Lifetime Learning Tax Credit.

This is just a breif overview of these tax credits that all students should know about and tahe advantage of. I reecomend that you do refer to IRS Publication 970
and IRS: Topics for Students
for further information or discuss these tax credits with your Tax Professional.

P Nash is currently a student in his final year in a Business Administration program. He blogs on different topics related to higher education. Visit his blog College Matters for more higher education information.

Copyright 2005 P. Nash