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Tax Credits Hope Credit You may be able to claim a Hope credit of up to $1,650 for qualified education expenses paid for each eligible student. A tax credit reduces the amount of income tax you may have to pay. Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself. The Hope credit is a nonrefundable credit. This means that it can reduce your tax to zero, but if the credit is more than your tax the excess will not be refunded to you. The Hope credit you are allowed may be limited by the amount of your income and the amount of your tax. For additional information go to http://www.irs.gov/publications/p970/ch02.html#d0e1330 Lifetime Learning Credit Beginning on July 1, 1998, taxpayers may be eligible to claim a nonrefundable Lifetime Learning Credit against their federal income taxes. The Lifetime Learning Credit may be claimed for the qualified tuition and related expenses of the students in the taxpayer's family (i.e., the taxpayer, the taxpayer's spouse, or an eligible dependent) who are enrolled in eligible educational institutions. After 2002, the credit amount is equal to 20 percent of the taxpayer's first $10,000 of out-of-pocket qualified tuition and related expenses. These amounts are not indexed for inflation. For additional information go to http://www.irs.gov/individuals/article/0,,id=96273,00.html | |||||||
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