FAQs - Credits
What are the Education Credits?
The American Opportunity Credit: This credit can help parents and students pay part of the cost of the first four years of college. The American Recovery and Reinvestment Act modifies the existing Hope Credit for tax years 2009 and 2010, making it available to a broader range of taxpayers.
Eligible taxpayers may qualify for the maximum annual credit of $2,500 per student. Generally, 40 percent of the credit is refundable, which means that you may be able to receive up to $1,000, even if you owe no taxes.
The Lifetime Learning Credit: This credit can help pay for undergraduate, graduate and professional degree courses – including courses to improve job skills – regardless of the number of years in the program. Eligible taxpayers may qualify for up to $2,000 per tax return.
The Hope Credit: The credit can help students and parents pay part of the cost of the first two years of college. This credit generally applies to 2008 and earlier tax years.
You cannot claim the American Opportunity and the Hope and Lifetime Learning Credits for the same student in the same year. To qualify for an education credit, you must pay post-secondary tuition and certain related expenses for yourself, your spouse or your dependent. The credit may be claimed by the parent or the student, but not by both. Students who are claimed as a dependent cannot claim the credit.
I’ve paid tuition to a foreign educational institution. Are these expenses eligible for a deduction or credit?
In general, these expenses will not be deductible or eligible for a credit unless they are accrued from an eligible educational institution.
Qualified expenses are amounts paid for tuition, fees and other related expense for an eligible student that are required for enrollment or attendance at an eligible educational institution. An eligible educational institution is a school offering higher education beyond high school. It is any college, university, vocational school or other post-secondary educational institution eligible to participate in a student aid program run by the U.S. Department of Education. If you aren’t sure if your school is an eligible educational institution:
• Ask your school if it is an eligible educational institution
• See if your school is on the U.S. Federal Student Aid Code List