Educational Tax Credits
For each student, you can elect for any tax year either the Hope Credit or the Lifetime Learning Credit, but not both. Refer to IRS Publication 970 for additional information. Keep in mind that you can use New York's College Savings Program in conjunction with either Credit.
Hope Credit:
For expenses paid after December 31, 1997, and for academic periods beginning after that date, you may be able to claim a Hope Credit of up to $1,500 for the qualified tuition and related expenses paid for each eligible student. This Credit may be claimed for only two taxable years for each eligible student. A student is you, your spouse, or a dependent you claim on your tax return.
You can claim a Hope Credit only for an eligible student who meets all of the following requirements:
- has not completed the first two years of post secondary education (generally, the freshman or sophomore years of college)
- is enrolled in a program that leads to a degree, certificate, or other recognized credential
- is taking at least one-half of the normal full-time work load for his or her course of study for at least one academic period beginning during the calendar year
- is free of any felony conviction for possessing or distributing a controlled substance
The amount of the Hope Credit is 100% of the first $1,000 plus 50% of the next $1,000 you pay for each eligible student’s qualified tuition and related expenses. The maximum amount of Hope Credit you can claim in l998 is $1,500 times the number of eligible students. This means that you can claim the full $1,500 for each eligible student whom you pay at least $2,000 for qualified expenses. However, the Credit may be reduced based on your modified adjusted gross income.
Lifetime Learning Credit:
For expenses paid after June 30, 1998 and for academic periods beginning
after that date, you may be able to claim a Lifetime Learning Credit
of up to $1,000 for the total qualified tuition and related expenses
paid during the tax year for all students who are enrolled in eligible
educational institutions. A student is you, your spouse, or a dependent
you claim on your tax return.
- the Lifetime Learning Credit is not based on the student’s work load. It is allowed for one or more courses.
- it is not limited to students in the first two years of post secondary education
- expenses paid for graduate-level degree work are eligible.
- the imputed tuition value is considered a qualified tuition expense and may be claimed on your federal income tax
- there is no limit on the number of years for which the Lifetime Learning Credit can be claimed for each student
- the amount you can claim as a Lifetime Learning Credit does not vary (increase) based on the number of students for whom you pay qualified expenses
The amount of the Lifetime Learning Credit is 20% of the first $5,000 you pay for qualified tuition and related expenses for all students in the family.