Get Up to $2,000 in Education Tax Credits

There are two education tax credits available, the Hope Credit and the Lifetime Learning Credit. The credits are based on education expenses paid for you, your spouse, or your dependents.

Note: During any particular year, you can claim only one of these credits for each student.

The amount of the credit is determined by the amount you pay for "qualified tuition and related expenses" for each student and the amount of your modified adjusted gross income (MAGI). The Hope Credit is a tax credit of up to $1,650 credit per eligible student. The Lifetime Learning Credit is worth up to to $2,000 credit per return.

Qualified Expenses
Qualified expenses include tuition and fees required for enrollment or attendance at an accredited college, university, vocational school, or other postsecondary educational institution that is eligible to participate in a student aid program administered by the Department of Education.

Qualified expenses do not include room and board, insurance, transportation, or other similar personal, living, or family expenses. Qualified expenses may include fees for books, supplies, and equipment only if the fees must be paid to the school for the student's enrollment or attendance. In addition, qualified expenses may include student activity fees if the fee must be paid to the school for the student's enrollment or attendance.

Note: If you pay qualified education expenses with certain tax-free funds (GI Bill, Pell grants, military tuition assistance, employer-provided assistance), you cannot claim a credit for those amounts. You may only claim expenses that are not covered or exceed the amount of tax-free assistance you received.

Education Credit Eligibility
You can claim a Hope Credit only for an "eligible student." An "eligible student" is a student who:

1. As of the beginning of the year, has not completed the first two years of postsecondary education (that is, generally is a freshman or sophomore in college).  
2. Did not have expenses that were used to figure a Hope credit in any 2 earlier tax years.  
3. Is taking at least half of the normal full-time workload for the student's course of study for at least one academic period beginning during the calendar year, and  
4. Is free of any federal or state felony conviction for possessing or distributing a controlled substance as of the end of the year.

You can claim a Hope Credit for only two tax years for each eligible student. An eligible student can be you, your spouse, or your dependent for whom you claim an exemption.

The Lifetime Learning Credit is not based on the student's workload. It is allowed for one or more courses that the student takes at an eligible educational institution. The credit is not limited to students in the first two years of postsecondary education. Expenses for graduate level degree work are eligible. However, to be eligible for the credit, the student must be taking course work in order to acquire or improve job skills. There is no limit on the number of tax years for which the Lifetime Learning credit can be claimed for each student. The amount you can claim as a credit does not vary (i.e., increase) based on the number of students for whom you pay qualified expenses.

Both the Hope Credit and Lifetime Learning Credit may be reduced if your modified adjusted gross income (MAGI) is between $47,000 and $57,000 ($94,000 and $114,000 if you file a joint return). You may not cliam a credit if your MAGI exceeds $57,000 ($114,000 if you file a joint return). You cannot claim either credit if you are married filing a separate return.

Claiming Your Education Credit
You claim the Hope credit by completing Parts I and III of Form 8863 (PDF) and submitting it with your Form 1040 or 1040A. Enter the credit on Form 1040, line 49, or on Form 1040A, line 31.

For additional information on education credits, refer to Publication 970, Tax Benefits for Education. You can also download a copy of the IRS Publication 970 in PDF format.