Education Tax Credits

Don't forget two important education tax credits: the Hope Scholarship Credit and the Life-Time Learning Credit. Since these are tax credits — not tax deductions — they reduce the amount of income tax that you pay. That means money right back in your pocket. To qualify for these credits, you must file a tax return and owe taxes.

You can claim the Hope Scholarship Credit for any student in your family who is attending college or vocational school at least halftime. The credit is for tuition or expenses, and can be as much as $1,500 per student for each of the first two years of his or her education. So if two people in your family are attending college, for example, that’s a $3,000 tax credit.

The Life-Time Learning Credit is for tuition or fees for a student’s second two years of college or for any continuing-education course work, such as a course to improve your job skills. You can claim a credit equal to 20 percent of $5,000 in educational expenses on your tax return.

It’s important to add that these tax credits are not available to taxpayers who have a modified adjusted gross income over $50,000 ($100,000 for married taxpayers filing jointly).

You just need to ask your college for a form that says you are eligible.

Here’s a chart that illustrates the types of programs that are eligible for these tax credits:

Be sure to contact your Farm Credit office for more details and help in planning for college education expenses.

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