Using a College Tuition Credit Explained – Legal Magazine

The Hope credit is one of the ways to get a tax break to cover college tuition costs. Your adjusted gross income is the determining factor for eligibility to this Hope credit. The credit can be used to get a tax credit but it cannot be used as a deduction. Tax credits are based on the amount of tax owed by a taxpayer. Each dependent who is eligible for Hope credit and the maximum amount one will receive is $1650. The limit is two years for this Hope credit. Credit cannot be utilized by the taxpayer until after having completed two years of dependent schooling.

The second type of tax credit that which a tax payer can take advantage of is called the Lifetime Learning credit. The credit is not subject to the two-year limitation. It operates a bit different from the way that the Hope credit works. The taxpayer is entitled to a 10 percent deduction for the first $10,000 that they pay on tuition. A maximum of 22,000 is allowed. The credits cannot be refunded. These credits reduce the amount of tax the taxpayer needs to pay, but they will not allow the person to receive a refund. la7tk9y1cn.

Author: Julie

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