Question: What are education tax credits?
Answer: There are two education-related tax credits that can be claimed to reduce your income tax liability dollar for dollar.
The Hope scholarship credit, temporarily enhanced and renamed the “American Opportunity Tax Credit,” can be claimed for tuition, fees, and course materials during four years of post-secondary education. It’s worth a maximum of $2,500 in tax savings per student, per year. The student must be enrolled in an accredited school at least half-time during the year.
The lifetime learning credit can be claimed for tuition and fees relating to any year of post-secondary education and for job-related courses as well. The credit is worth a maximum of $2,000 in tax savings per family (rather than per student).
Both the Hope and lifetime learning credits cannot be claimed for the same student in a given year. Also, the credits cannot be claimed for the same expenses for which another tax benefit is also received.