Understanding Educational Tax Credits
- The Hope Credit lets you reduce your taxes by up to $1,500 student for tuition paid in each of the first two years of college.
- The Lifetime
The Hope CreditThe amount of the Hope Credit that you can is based on 100% of the first $1,000 that is paid, in to 50% of the second $1,000 that is paid. The Hope Credit can only be applied to your child's college education. This credit can be applied for each that is in the first four years of college. Eligibility for the Hope Credit is based upon the parent's federal modified . If you are , your modified adjusted must not exceed $40,000 and if you are married, your must not exceed $80,000. If your income exceeds these amounts but your income is below $50,000, or $100,000 if married, you may take a reduced credit. If you' married but your taxes separately, you may not take the Hope Credit, regardless of income.
The Lifetime Learning Credit lets you claim 20% of the first $5,000 of educational expenses, up to $1,000 annually. Starting in 2003, the Lifetime Learning Credit lets you claim 20% of the first $10,000 of qualified educational expenses, up to $2,000 annually. This credit can be claimed after the child's first two years of college, since the Hope Credit can no longer be claimed at that time. The Lifetime Learning Credit can be used for any postsecondary education, including technical and graduate programs. The for the are identical to the of the Hope Credit.