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HOPE SCHOLARSHIP TAX
CREDIT
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LIFETIME LEARNING TAX CREDIT
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STUDENT LOAN INTEREST DEDUCTION
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(Non-Refundable Tax Credit)
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(Non-Refundable Tax Credit)
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(Deducted from Adj. Gross Income)
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Beginning January 1, 1998
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Beginning July 1, 1998
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Beginning January 1, 1998
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Program leading to a Degree
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Either Degree Program OR Job-related Skills
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Program leading to a Degree
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At least ½ time student at least 1 semester
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No Requirements - No Minimum # Hours
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Must have been at least ½ time student
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First 2 years postsecondary education
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No Limit on level of postsecondary studies
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No Limit on level of postsecondary studies
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Student must be free of any Federal/State felony
conviction for possession/distribution of a controlled substance
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No Requirement
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No Requirement
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Claim no more than 2 years per student
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No Limit to # of years claimed per student
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No longer limited to first 60 months
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Does Not Include Graduate Level Studies
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Includes Graduate Level Studies
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Includes Graduate Level Studies
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100% of first $1,000 out-of-pocket expense
50% of next $1,000 out-of-pocket expense
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20% of first $10,000 out-of-pocket expense
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Max $2,500 per taxpayer from 2003 on
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Maximum $1,500 per student
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Max. $2,000 per taxpayer for any # of students
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Claim
either Hope Scholarship or Lifetime Learning but not both for each
student each year
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May be claimed in addition to other credits
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Either student OR taxpayer claiming student as
dependent may claim that student’s tax credit, but not both in
the same year
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Student may not claim tax credit if
claimed as a dependent by another taxpayer
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Adjusted Gross Income :
Under $42,000 ($85,000 married filing jointly) - May claim
up to maximum credit
$42,000 to $52,000 ($85,000 to $105,000 married filing
jointly) - The Credit gradually reduces on a sliding scale
Over $52,000 ($105,000 married filing jointly) - Cannot
claim Hope or Lifetime Learning Credit
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Adjusted Gross Income :
$50,000 or less ($100,000 married filing jointly) may claim
up to maximum credit
$50,000 to $65,000 ($100,000 to $130,000 married filing
jointly) credit reduces
Above $65,000 ($130,000 married filing jointly) Not eligible
for interest deduction
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Approved Out-of-Pocket Funds :
Earnings, Loans, Gifts, Inheritance and Personal
Savings.
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Deduction does not depend on whether loan is
federally guaranteed or subsidized, as long as other eligibility
requirements are met.
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Qualified Tuition & Fees :
Tuition & Fees required for student to be
enrolled or to attend school.
Not Eligible: Payments for sports, games, or hobbies
unless part of the degree program.
(Books/equipment are ONLY eligible if required to
purchase through NAU ONLY)
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Qualified Expenses :
Tuition, Fees, Room, Board, Books, Equipment,
Transportation, and other necessary educational expenses.
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Qualified Tuition & Fees (or Qualified
Expenses for Interest Deduction) are Reduced by any Refunds as
well as:
Any tax-free educational assistance you received.
Qualified Scholarships excludable from income
Veteran’s or Armed Forces educational assistance (Chapter
30, 31, 32, 34, or 35 of title 38, U.S. Code or under chapter
1606 of title 10)
Employer-provided educational assistance excludable from
income
Any other nontaxable payments (other than gift, bequest, devise, or inheritance)
received for education expense.
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Married students(or married taxpayers claiming
students as dependents) -
Must file a joint return with spouse to claim
tax credit or interest deduction on federal income tax return
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Tax Benefits May Include:
Taxpayer, Taxpayer’s Spouse, and Eligible
Dependents - (Eligible Dependent: Unmarried Child, Child under 19
years old or Full-time Student under 24 Taxpayer supplies more
than ½ support for year)
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Qualified Institution:
Generally all accredited public, nonprofit, and
proprietary postsecondary institutions. Described in Higher
Education Act of 1965 (20 U.S.C. 1088) And participates in
federal student financial aid program under title IV of HEA (20
U.S.C. 1070 et seq.) or certified but not
participating
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