Using a College Tuition Credit Explained – Legal Magazine

This speaker will discuss some of the primary strategies students can use to save taxes when paying college tuition.

The Hope credit is one way to get a tax break on college tuition. The Hope credit is contingent on the amount of income that the person earns as adjusted. This credit is available for tax credits, however it cannot be used as an deduction. A tax credit takes a dollar-for-dollar amount of the taxes that a taxpayer owes. Maximum amount for Hope credit that a person can get is $1,650 per person who is eligible to be a dependent. The limit is two years for this Hope credit. Therefore, the taxpayer cannot take advantage of the credit following the two first years of the qualified pupil’s academics.

The second type of tuition tax credit that a taxpayer could use is tax credit for Lifetime Learning credit. The credit isn’t limited to two years. This credit is a bit more distinct than it’s Hope credit. Taxpayers are able to deduct 10 percent of the initial $10,000 they spend on tuition, with a maximum credit amount of $2,000. Each of these credit options is refundable. These credits will decrease the amount tax a taxpayer must to pay, but they will not give the taxpayer a refund. s5sf3r5m5i.

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