Scholarship and Lifetime Learning Tax Credit Information
NMSU's International Mall.
Hope Scholarship
The Hope Scholarship Tax credit is a
tax credit equal to 100% of the 1st $1,000 of a student's qualified
educational expenses (i.e. tuition and mandatory fees) plus 50%
of the next $1,000.
The maximum credit is $1,500 per student in each of the first two
years of a post secondary degree program. The maximum credit will
increase for inflation after 2001. Students must be enrolled at
least half-time during at least one academic period that begins
during a tax year and cannot have had a felony drug conviction in
a year that the credit applies.
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Lifetime
Learning Tax Credit
The Lifetime Learning Tax Credit applies to qualified tuition and
mandatory fees for undergraduate, graduate, and continuing educational
expenses paid for the taxpayer, his or her spouse, or dependent
children. The maximum credit is currently $1,000 per family per
year. Starting in 2003, the amount of eligible education expenses
increases to $10,000, resulting in a $2,000 maximum tax credit.
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Hope
Scholarship and Lifetime Learning tax credits limitations
The Hope and Lifetime credits cannot both be claimed for the same
student in the same tax year. The taxpayer may claim both credits
on one tax return (for different students) but must choose which
credit to claim for each individual. These credits may not be combined
with tax free withdrawals from education IRAs. Scholarships, grants,
and other tax free tuition benefits offset eligible education expenses.
The full value of both credits is available to married taxpayers
filing jointly with an adjusted gross income (AGI) of $80,000 or
less and to single taxpayers with an adjusted gross income (AGI)
of $40,000 or less. The tax credits phase out gradually. Once married
taxpayers' AGI exceeds $100,000 or single taxpayers' AGI exceeds
$50,000, they are not eligible for these credits. The income limits
will be adjusted for inflation after 2001. A student who is claimed
as a dependent on another taxpayer's return may not claim a tax
credit on his or her own tax return. The credit will be claimed
on the return of the taxpayer claiming the student as a dependent.
Married taxpayers must file a joint return to qualify for the credits.
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Further
Tax Information
The University does not render personal tax advice. Please consult
with a tax professional to discuss your personal situation. If you
have further questions, you may contact the IRS at 1-800-TAX-FORM
and request Publication 970, Tax Benefits for Higher Education.
This publication is also available on-line through the links provided
below. These links will take you to Web sites that provide additional
information:
IRS
Publication 970
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