Taxpayer Relief Act of 1997 (Education Tax Credit)

In accordance with the Taxpayer Relief Act of 1997, beginning in 1998, individuals may be able to claim the new tax credit for higher education costs. These are the American Opportunity Credit and the Lifetime Learning Credit.
 
American Opportunity Credit
 
Applies to students who are enrolled at least half-time in their first four years of study at an eligible educational institution. A maximum of $2,500 per year of qualifying tuition and required related expenses may be claimed as a credit against taxes owed by taxpayers who meet defined income restrictions. The American Opportunity Credit can be claimed for an eligible student or dependent student who meets the following requirements:
  1. Is enrolled in the first four years of postsecondary education.
  2. Is taking at least one-half of the normal full-time work load (6 units or more) for his or her course of study for at least one academic period (spring, summer, fall) during the calendar year.
  3. Is enrolled in a program that leads to a degree, certificate, or other recognized educational credential.
  4. Is free of any felony conviction for possessing or distributing a controlled substance.
The credit amount starts phasing out for individuals making more than $80,000 and for joint filers making more than $160,000.
 
LIFETIME LEARNING CREDIT 
 
Individuals may be able to claim a Lifetime Learning Tax Credit of up to $2,000 for the total qualified tuition and related expenses paid during the tax year for all eligible students or dependent students who are enrolled in eligible educational institutions.
  1. The Lifetime Learning Credit is not based on the student’s work load. It is allowed for one or more courses.
  2. The Lifetime Learning Credit is not limited to students in the first four years of postsecondary education.
  3. There is no limit on the number of years for which the Lifetime Learning Credit can be claimed for each eligible student.
  4. The amount you can claim as a Lifetime Credit does not vary (increase) based on the number of eligible students for who you pay qualified expenses.
For a more detailed Q & A on Tax Credits, visit: http://www.irs.gov/publications/p970/index.html Additional Information:
 
Internal Revenue Services
 
To obtain/view copies of Internal Revenue Service publications, including Publication 970 Tax Benefits for Higher Education
 
IRS Telephone Assistance: (800) 829-1040
 
IRS Local Taxpayer Assistance Center: (707) 523-0924