Tax credits

Hope Scholarship Credit

This tax credit is available to parents of dependent first- and second-year students or to students who are not claimed as dependents on their parents' federal tax return. The tax credit is equal to 100% of the first $1,100 of tuition and eligible fees (less scholarships, grants, and tax-free tuition benefits) and 50% of the next $1,100 of tuition and fees, for a maximum benefit of $1,650 each tax year. The maximum amount of eligibility is affected by the taxpayers' Modified Adjusted Gross Income.

Lifetime Learning Credit

This credit is based upon tuition and fees for undergraduate, graduate, and continuing education course work. A family can claim a tax credit equal to 20% of the first $10,000 of qualified educational expenses, for a maximum benefit of $2,000 each tax year. The maximum amount of eligibility is affected by the taxpayers' Modified Adjusted Gross Income.

Who is eligible?

• Students in their first two years of undergraduate study are eligible for either the Hope Scholarship or the Lifetime Learning credit. Students enrolled in their third or fourth years of undergraduate studies or in graduate or continuing education courses are eligible for the Lifetime Learning credit only.
• Students must be enrolled at least half time.
• Married taxpayers filing jointly with a modified adjusted gross income of less than $114,000.
• Single taxpayers with a modified adjusted gross income of less than $57,000.
• Students must have no drug felonies.

Questions?

If you have any additional questions about your eligibility for these education tax credits, you can call the IRS at (800) 829-1040 or consult your tax advisor. Colleges and universities are unable to provide students and families with tax advice.

For more information about tax credits visit:

• IRS Publication 970
• NASFFA tax benefits guide