The Lifetime Learning Tax Credit, the Hope Scholarship Tax Credit and the Higher Education Tuition and Fees Deduction, offer some form of financial relief for students overburdened with tuition fees and the high cost of books.
If you earn a single adjusted gross income of less than $52,000, or a joint gross income of less than $105,000, you are eligible for the Lifetime Learning Tax Credit. All you need to do is be enrolled for at least one class in any accredited undergraduate or graduate institution. You can obtain a maximum credit of 20 % on the first $10,000 you spend toward educational expenses.
For freshmen and sophomores in at least half time programs in undergraduate institutions, the Hope Scholarship Tax Credit offers a maximum 100 % on the first $1,000 and 50 % on the second $1,000 spent for educational purposes. The income cap prerequisites are the same as for the Lifetime Learning Tax Credit. Those who apply for this credit should be free of any felony convictions involving the possession or distribution of controlled substances.
If you earn a single adjusted gross income between $65,000 and $80,000, or a family income between $130,000 and $160,000, you qualify for the Higher Education Tuition and Fees Deduction, through which you are eligible for a deduction of $2,000.
For all tax credits, you will have to obtain the 1098-T form from your institution at the beginning of each academic year. This document contains information about your educational expenses like tuition fees, payments made, student status, and scholarships won. A copy of the form will also be sent by your institution to the IRS.