Many students don't realize that by going to college they are eligible for certain tax credits. Yes, the government is actually rewarding those who choose to further their education. The key is to knowing what credits a student is able to claim in order to benefit from this great opportunity. There are two different tax credits available to students, but they have rules for each one. There is the HOPE Scholarship which is actually a credit and the Lifetime Learning Tax. One of the rules is that only one of the credits can be used for the same year for the same student.
The HOPE credit is very different from the Lifetime Learning credit. The Hope credit can only be used for two years for eligible students. The HOPE credit offers a maximum of $1500 per student. With the HOPE credit the student has to be going to school at least part time for an academic period during the tax year. Also an individual can't claim this credit if they are not pursuing a degree or certificate. Anyone convicted of a felony drug conviction will not be eligible to take this credit, ever. Even though there are many restrictions on the HOPE credit, there are also obvious benefits in taking this credit.
The Lifetime Learning Tax is not quite as stringent as the HOPE credit. This credit can offer as much as $2000 per return. Also one does not have to be in the pursuit of a degree to claim this credit. All it takes one course to become eligible for this credit; they don't hold the same requirements as the HOPE credit. There are also no restrictions on based upon convictions for this credit. The catch with the Lifetime learning credit is that you can only claim 20% on the first $10,000 you pay in school expenses. This can be a determining factor between the two credits.
Like all things that pertain to taxes, there are always exceptions and fine print. There might be circumstances that only qualify an individual for one of the credits so choosing ceases to be a factor. For those parents paying on multiple students it is an option to vary them between the students to gain the maximum tax cut. As in all things pertaining to the government, if one makes too much money they aren't eligible for tax credits such as these. Also there is no doubling up on educational credits. If one has already claimed the tuition and fees deduction, neither of the tax credits would apply. Uncle Sam doesn't permit double dipping!
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