Tax Tip: Education Credits Can Help At Tax Time

Are you footing the costs of higher education for yourself or your family? Education tax credits can help offset those costs. The Hope Credit and the Lifetime Learning Credit are education credits which you can subtract in full from your federal income tax, not just deduct from your taxable income.

The Hope Credit applies only for the first two years of post-secondary education - such as college or vocational school - and it can be worth up to $1,500 per student, per year. It does not apply to graduate and professional-level programs. You're allowed 100% of the first $1,000 of qualified tuition and related fees paid during the tax year, plus 50% of the next $1,000. The student must be enrolled at least half-time. See qualifications below.

The Lifetime Learning Credit applies to undergraduate and graduate level and professional degree courses, including instruction to acquire or improve job skills. If you qualify, your credit equals 20% of the first $5,000 of post-secondary tuition and fees you pay during the year for all eligible students, for a maximum credit of $1,000.

You cannot claim both the Hope and Lifetime Learning Credits for the same student in the same year.

To qualify for either credit, you must pay post-secondary tuition and fees for yourself, your spouse, or your dependent. The credit may be claimed by the parent or the student but not by both. However, if the student was claimed as a dependent, the student cannot claim the credit.

These credits are phased out for Modified Adjusted Gross Income above $40,000 ($80,000 for married filing jointly) and eliminated completely for Modified AGI of $50,000 or more ($100,000 for married filing jointly). If the taxpayer is married, the credit may be claimed only on a joint return.

The Hope credit is not allowed for a student convicted of a felony drug offense.

View more tax tips!


This daily Tax Tip has been provided by the IRS

You may like these other stories...

Boehner addresses GOP priorities ahead of midterm electionsHouse Speaker John Boehner (R-OH) on Thursday delivered what amounted to closing arguments ahead of the November elections, laying out a list of Republican...
As anyone who's ever been through a divorce can attest, the pain of parting with your spouse isn't just emotional—the fallout from divorce can wreak financial havoc as well long after the dust in the courtroom...
Former DOJ Tax Division head Kathryn Keneally joining DLA Piper in New YorkGlobal law firm DLA Piper announced on Thursday that Kathryn Keneally, the former head of the US Justice Department Tax Division, is joining the firm...

Already a member? log in here.

Upcoming CPE Webinars

Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 21
Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience's communication style.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.