The Hope credit and the lifetime learning credit are tax credits
that may be available to you if you pay higher education costs. This
chapter discusses the Hope credit. The lifetime learning credit is
discussed in chapter 2 of this publication.
The following table, Comparison of Education Credits
summarizes the differences between the Hope and lifetime learning
credits. If you are eligible to claim both credits based on the higher
education expenses of one student, it will generally be to your
benefit to claim the Hope credit.
Comparison of Education Credits
This chapter explains:
- Who can claim the Hope credit,
- What expenses qualify for the Hope credit, and
- How the Hope credit is computed and claimed.
What is the tax benefit of the Hope credit?
You may be able to claim a Hope credit of up to $1,500 for
qualified tuition and related expenses paid for each
eligible student.
A tax credit reduces the amount of income tax you may have to pay.
Unlike a deduction, which reduces the amount of income subject to tax,
a credit directly reduces the tax itself.
Credit more than tax.
Your Hope credit cannot be more than the amount of your tax.
Therefore, you cannot get a refund for any part of the credit that is
more than your tax.
Can you claim both education tax credits this year?
For each student, you can elect for any year only one of
the credits. For example, if you elect to take the Hope credit for a
child on your 2000 tax return, you cannot, for that same child, also
claim the lifetime learning credit for 2000.
Lifetime learning credit after Hope credit.
You can claim the Hope credit for the first 2 years of an eligible
student's postsecondary education and claim the lifetime learning
credit for that same student in later years.
Tax credits for more than one student.
If you pay qualified expenses for more than one student in the same
year, you can choose to take credits on a per-student, per-year basis.
This means that, for example, you can claim the Hope credit for one
student and the lifetime learning credit for another student in the
same year.
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