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LIFETIME LEARNING and American Opportunity (Hope) tax CREDITS

Credits are subtracted from the tax a family owes, rater than being subtracted from taxable income like a tax deduction.

Eligibility

Taxpayers:

  • You must file a federal income tax return and owe taxes.
  • Credit is gradually reduced based on income.

Students:

  • You must be enrolled in a degree or certificate program

Students may claim the credits themselves if they are not claimed as a dependent by another taxpayer.

Credit Amounts

American Opportunity (formerly known as Hope) tax credit:

As a result of the American Recovery and Reinvestment Act of 2009 (ARRA), the Hope Credit for tax years 2009 and 2010 has been modified and can now be referred to as the American Opportunity Tax Credit. The American Opportunity (Hope) Credit is now available for the first four years a student is enrolled in post-secondary education and is carrying at least a half time workload while pursuing an undergraduate degree, certificate or other recognized credential. Previously the credit could be claimed for only the first two years of post-secondary education.

The American Opportunity Credit is available to eligible taxpayers on a per student basis for qualified expenses as a student is enrolled at or attending an eligible educational institution. Eligibility criteria for education tax credits is provided by IRS form 1098-T and are mailed to domestic students' home address by January 31st of every year.

This credit provides up to $2,500 for each eligible dependent student and is phased out (gradually reduced) if your modified adjusted gross income (AGI) is between $80,000 and $90,000 (between $160,000 and $180,000 if you file a joint return)

Lifetime learning credit:

Up to $2,000 per family. There is no limit on the number of years a family may receive this credit.

The credit is phased out (gradually reduced) if your modified adjusted gross income (AGI) is between $50,000 and $60,000 (between $100,00 and $120,000 if you file a joint return).

Actual amounts depend on the family’s income and other factors.

More Information

Hope credit:
IRS Publication 970 – Tax Benefits for Education (chapter 2)

Lifetime learning credit:
IRS Publication 970 – Tax Benefits for Education (chapter 3)

Student Stories Fausto Morales
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