Tax Credits:

Education Credits

There are two basic credits that qualify as education credits on your tax return - the Hope Scholarship Credit and the Lifetime Learning Credit. Both of these credits are figured using IRS Form 8863, Education Credits (Hope and Lifetime Learning Credits.) You may not claim both of these credits for the same student within the same year. Keep in mind that credits reduce your taxes, dollar for dollar and are subject to tax liability limits. You may be able to claim one of the credits if you pay qualifying higher education expenses for you, your spouse or a dependent.

Married couples must file jointly to claim educational credits. Higher education credits cannot be claimed if your modified adjusted gross income is more than $50,000 if filing singly or $100,000 if filing jointly. If your adjusted gross income is between $40,000 and $50,000 for single filers or between $80,000 and $100,000 for joint filers, the amount of credit you may claim will be phased out.

The Hope Scholarship Credit
This credit allows for a $1,500 credit for each eligible student that is enrolled in his or her first or second year of college or post-secondary school. Eligible students must meet the following requirements:

  • Be enrolled in one of the first two years of postsecondary education
  • Be enrolled in a program or curriculum that leads to a certificate, degree or other recognized educational credential
  • Be enrolled in at least one-half of the normal full-time course load for at least one semester throughout the academic year
  • Cannot qualify if the student has been convicted of a drug-related felony such as possession or distribution of drugs

The Lifetime Learning Credit
This credit allows for a maximum credit of $1,000. It is actually calculated as 20% of up to $5,000 for qualified tuition. The Lifetime Learning Credit differs from the Hope Scholarship Credit in the following areas:

  • The student need not be enrolled in the first two years of postsecondary education
  • The student does not need to be enrolled in a curriculum that leads to a degree. Enrollment in a program that is taken to acquire or to strengthen job skills qualifies as well
  • The student is not required to be enrolled for at least one-half of the normal course load
  • Although the Hope Credit can be claimed per student, the Lifetime Learning Credit can only be claimed per family. That means that regardless of how many students are in your household, your maximum credit will be for $1,000.