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Affording Your Education >> Tax Benefits
The federal government offers two tax credit programs that allow you to reduce your income tax bill.
The Hope Scholarship Credit allows families to claim a credit of up to $1,500 for each eligible dependent for up to two tax years. The credit applies toward tuition and fees for the first two years of postsecondary education for students who are enrolled at least half time in an eligible degree or certificate program.
The Lifetime Learning Credit allows families to claim up to $2,000 per year for postsecondary education, including undergraduate or graduate degrees or individual courses to acquire or improve job skills.
For both tax credits, the amount an individual or family can claim depends on income, the amount of tuition and fees paid, and the amount received from certain scholarships and grants.
Also, you may be able to deduct up to $4,000 in tuition and fees from your income if you itemize deductions on your return.
For detailed information on education deductions and tax credits, see IRS Publication 970, Tax Benefits for Education, at www.irs.gov/publications/p970
To maximize your tax savings and ensure that you qualify, you should consult a tax expert regarding education credits and deductions. UMUC financial services staff members do not provide tax advice.
