Education Tax Credits – what are they and who can use them?

There are 3 types of education credits/deductions:

1. Hope Scholarship Credit– Tax credit of 100% of the first $1,200 and 50% of the next $1,200 for each of the first 2 years of post-secondary education (maximum of $1,800). This credit is per student, per year. A family may have more than one eligible student per year.

This credit is increased in 2009 to 100% of the first $2,000 and 25% of the next $2,000 for tuition, fees, and books (maximum of $2,500). Also in 2009, the credit is 40% refundable, meaning you can receive a credit for 40% of qualified education expenses, up to $1,000, even if you have no tax liability.

2. Lifetime Learning Credit– Tax credit of 20% of up to $10,000 of qualified tuition and fees paid during the tax year (maximum of $2,000). This credit is per taxpayer, per year.

3. Tuition & Fees Deduction– For those persons who may not qualify for the Hope or Lifetime Credits, due to income phase-out limits, qualified expenses may be deducted from earnings, up to $4,000.

4. The Midwestern Disaster Area Relief-  legislation has doubled the Education Tax Credits for those who qualify. You qualify for these increased tax credits if you attended class in a county declared to be in a Midwest Disaster Area.

Please fill out the form below to determine your eligibilty for the Midwestern Tax Relief.