Don't forget two important education tax credits: the Hope Scholarship Credit and the Life-Time Learning Credit. Since these are tax credits — not tax deductions — they reduce the amount of income tax that you pay. That means money right back in your pocket. To qualify for these credits, you must file a tax return and owe taxes.
You can claim the Hope Scholarship Credit for any student in your family who is attending college or vocational school at least half-time. The credit is for tuition or expenses, and can be as much as $1,500 per student for each of the first two years of his or her education. So if two people in your family are attending college, for example, that’s a $3,000 tax credit.
The Lifetime Learning Credit is for tuition or fees for a student’s second two years of college or for any continuing-education course work, such as a course to improve your job skills. You can claim a credit equal to 20 percent of $5,000 in educational expenses on your tax return.
It’s important to add that these tax credits are not available to taxpayers who have a modified adjusted gross income over $50,000 ($100,000 for married taxpayers filing jointly).
You
just need to ask your college for a form that says you are eligible.
Here’s a chart that illustrates the types of programs that are eligible
for these tax credits:
|
Tax
Credit
|
Eligible
Programs
|
|
Hope
Scholarship
|
First
two years of undergraduate work
|
|
Lifelong
Learning
|
Undergraduate,
graduate or individual course work
|
Be sure to contact your Farm Credit tax specialist for more details and help in planning for college education expenses.
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