| Parents and college students can benefit from | | | | must also claim the student as his dependent. |
| understanding the Educational Tax Credits and | | | | (Visit: for more information) |
| how they differ. | | | | What Educational Expenses Qualify for |
| The lifetime learning credit provides a maximum | | | | Deductions? |
| non-refundable tax credit of $2,000 per year | | | | Qualified education expenses include tuition and |
| (2007) for all students attending an eligible | | | | certain expenses required for enrollment at an |
| educational institution in the household. The lifetime | | | | eligible educational institution. An eligible educational |
| learning credit may be limited by your income and | | | | institution is any college, university, vocational |
| amount of tax. Only one education credit may be | | | | school or other postsecondary school who is |
| claimed for a student. | | | | eligible to receive student aid from the |
| The Hope credit provides a maximum | | | | Department of Education. |
| non-refundable tax credit of $1,650 per student | | | | Student activity fees, course related books, |
| for the first two years of post-secondary | | | | supplies and equipment are also included as legal |
| education. The Hope credit may be limited by | | | | expenses (some restrictions apply) |
| your income and amount of tax and again, only | | | | Expenses that don't qualify for educational |
| one education credit may be claimed for a | | | | expenses are insurance, medical expenses, room |
| student. | | | | and board, transportation or personal living |
| Example of differences, the taxpayer can claim | | | | expenses. |
| the Hope credit for no more then 2 years for the | | | | Can Colleges Outside of the US Qualify for |
| same student, however, there is no limit on the | | | | Expenses? |
| number of years you can use the Lifetime | | | | Certain colleges outside of the US participate in |
| Learning Credit for the same student. | | | | the Department of Education's Federal Student |
| The second major difference is, when using the | | | | Aid (FSA) programs, and qualify for educational |
| Hope Credit, the student must be pursuing an | | | | expenses on US tax returns. |
| undergraduate degree or a recognized credential. | | | | You can find a list of foreign schools who meet |
| The Lifetime Learning Credit does not require the | | | | the FSA's guidelines at |
| student to pursue a degree or educational | | | | Additional Notes on Educational Credit |
| credential. | | | | Even if tuition fees are paid with borrowed funds |
| The third major difference applies to the time a | | | | - the taxpayer can claim the deductions in the |
| student is enrolled in school. With the Hope Credit, | | | | year that the expenses were paid, not the year |
| a student must be enrolled at least half time for | | | | that the loan is repaid. (Consult with your tax |
| at least one academic period during the year. The | | | | professional for more information) |
| Life Time Learning Credit is available for one or | | | | If a taxpayer pays qualified expenses with certain |
| more courses. | | | | tax-free funds, they cannot claim a deduction for |
| The fourth difference, that many people, including | | | | those amounts. (Consult with a tax professional |
| tax professionals, are not aware of is, the Hope | | | | for further clarification) |
| Credit can not be claimed by a student who has a | | | | For clarification, seek advice from your Tax |
| felony drug conviction on his/her record. With the | | | | Professional, Tax Attorney or visit the Internal |
| Lifetime Learning Credit, the felony drug | | | | Revenue web site. |
| conviction rule does not apply. | | | | Contact your Tax Professional is just another |
| Who Can Claim a Dependent's Educational | | | | way of saying, that Tax Attornies, Enrolled |
| Expenses? | | | | Agents and CPAs, often differ in how they view |
| A taxpayer or his dependent, but not both can | | | | a Tax Code. Because your Tax Professional is the |
| claim a Lifetime Learning Credit for educational | | | | person you would go to, if the IRS has questions, |
| expenses. For the taxpayer to claim a Lifetime | | | | you want to consult them, before making certain |
| Learning Credit for his dependent's expenses, he | | | | tax decisions. |