Tax Tip
Hope Credit - Reduce your taxes with Educational CostsThe Taxpayer Relief Act of 1997 created the Hope Credit which provides a credit of up to $1,500 per year, per student for the first two years of post-secondary education. The allowable expenses are for tuition and other related educational expenses paid after 1997 for education starting after 1997.
This credit is targeted for low and middle income families and will not be available to all households. The credit will start to be phased out at certain income levels and will be completely phased out after reaching a certain modified adjusted gross income.
It may make sense for a parent to not claim the student as a dependent and allow the student to take advantage of the Hope Credit and the dependency deduction. Speak to your CPA about this before acting on this information. In order for the student to claim himself/herself as a dependent, he/she must provide 1/2 of his/her expenses for that tax year.
Keep accurate records and you will pay less out in taxes each year. By increasing your deductions on several things you will notice this at tax time.
This tip is a starting point for limiting your taxes. All the information is not included here due to space limitations. Always consult a professional before using a tax tip. These tips should be used to ask your CPA or investment advisor about.
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Last modified:
April 15, 2003