Hope and Lifetime Education Credits

Education after high school is expensive and getting more expensive every year. These tax credits are designed to help you pay those bills and to stay in school.

Hope Credit

Although you may have had to pay for costly college expenses, the Hope Credit, (also called the American Opportunity Tax Credit), can help with these costs by allowing you to deduct $2,500 directly off your taxes, if your income qualifies. And even if you don’t owe any taxes, you can actually receive up to $1,000 with this credit.
You can claim the Hope Credit on your tax return if:
  • you, your spouse, or your dependent is enrolled at least half-time,
  • it’s for the first two years of an eligible college, university or vocational school, (contact the school to see if it’s eligible), and
  • you were responsible for paying the college expenses.
Expenses include course-related books, supplies, equipment and student-activity fees. This credit is for college students in their first two years of college.

Lifetime Learning Credit

The Lifetime Learning Education Credit is for any person who takes college classes at any level at any time. It provides a tax credit of up to $2,000 on the first $10,000 of college tuition and fees. You can claim the Lifetime Learning Credit on your tax return if you, your spouse, or your dependent is enrolled at an eligible educational institution and you were responsible for paying college expenses. Even if you took only one class, you may take advantage of the Lifetime Learning Credit.
Editor’s Note: If you don’t qualify for the Hope Credit, you may be able to claim the Lifetime Learning Credit, or take a Tuition and Fees Deduction. You can choose whichever one of these credits or deductions will help you more, but you cannot use more than one for the same student in the same year.
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