Tax Benefits

• Have your parents investigate tax benefits:
• Hope and Lifetime Learning Tax Credits — Students or parents may be eligible for a Hope or Lifetime Learning Federal Tax Credit that lets them write off college costs dollar-for-dollar when they file their taxes.
• The Hope credit is worth up to $1,500 for each student enrolled at least half time for the first and second years of college. It’s calculated at 100 percent of the first, $1,000 in out-of-pocket costs for qualified tuition and related expenses, and 50 percent of the second $1,000 for these college expenses.
• The Lifetime Learning Tax Credit picks up where the Hope Credit leaves off. It covers 20 percent of a family’s tuition expenses, up to $5,000.
• Deductions for Education Expenses — Families can deduct qualified tuition and related expenses from their taxable income. This deduction follows the same guidelines as those for the Hope and Lifetime Learning credits. However, taxpayers may not claim both the deduction and one of the tax credits for the same expenses.
• Student Loan Interest Reduction — Taxpayers can deduct from their taxable income up to $2,500 in interest paid on student loans each year for the life of the loans. This deduction has income limitations.
• For more information on these programs, students and their families should contact their tax advisors