Education Tax Credits

The Internal Revenue Code provides for Education Tax Credits for higher education for yourself or your qualified dependent. The Hope Credit and the Lifetime Learning Credit are two education credits available which may benefit you. Credits are dollar for dollar reduction of income tax liabilities.

The Hope Credit

  • The Hope Credit applies to the first two years of post-secondary education, such as college or vocational school. The credit does not apply to the third, fourth, or higher years of undergraduate programs, to graduate programs, or to professional-level programs.
  • The credit can be worth up to $1,650 per eligible student, per year.
  • The credit applies to 100% of the first $1,100 of qualified tuition and related fees paid during the tax year, plus 50% of the next $1,100.
  • A qualified student must be enrolled at least half-time for at least one academic period which began during the year.
  • The student must be free of any federal or state felony conviction for possessing or distributing a controlled substance as of the end of the tax year.

The Lifetime Learning Credit

  • The Lifetime Learning Credit applies to undergraduate, graduate and professional degree courses, including instruction to acquire or improve job skills, regardless of the number of years in the program. The credit equals 20% of the first $10,000 of post-secondary tuition and fees paid during the year, for a maximum credit of $2,000 per tax return.

The Hope and Lifetime Learning Credits cannot be both claimed in the same tax year for the any given student in the same year. The Lifetime Learning Credit applies to the cost of post-secondary tuition and certain related expenses for yourself, your spouse or your dependent. The credit may be claimed by the parent or the student, but not by both. Students who are claimed as a dependent cannot claim the credit.

These credits are phased out for Modified Adjusted Gross Income over $47,000 ($94,000 for married filing jointly) and eliminated completely for Modified Adjusted Gross Income of $57,000 or more ($114,000 for married filing jointly). If the taxpayer is married, the credit may be claimed only on a joint return.