Tax credit for college students??

Question

I heard that there is some sort of federal tax credit for college students that you can use twice throughout your college career-anyone know anything about this??

Answer 1

Yes there is

From www.irs.gov

http://www.irs.gov/individuals/article/0,,id=96273,00.html

The form you need to fill out is an 8863 and can be found here:
http://www.irs.gov/formspubs/lists/0,,id=97817,00.html

Beginning on July 1, 1998, taxpayers may be eligible to claim a nonrefundable Lifetime Learning Credit against their federal income taxes. The Lifetime Learning Credit may be claimed for the qualified tuition and related expenses of the students in the taxpayer's family (i.e., the taxpayer, the taxpayer's spouse, or an eligible dependent) who are enrolled in eligible educational institutions. Through 2002, the amount that may be claimed as a credit is equal to 20 percent of the taxpayer's first $5,000 of out-of-pocket qualified tuition and related expenses for all the students in the family. After 2002, the credit amount is equal to 20 percent of the taxpayer's first $10,000 of out-of-pocket qualified tuition and related expenses. Thus, the maximum credit a taxpayer may claim for a taxable year is $1,000 through 2002 and $2,000 thereafter. These amounts are not indexed for inflation.
If the taxpayer is claiming a Hope Scholarship Credit for a particular student, none of that student's expenses for that year may be applied toward the Lifetime Learning Credit. The amount a taxpayer may claim as a Lifetime Learning Credit is gradually reduced for taxpayers who have modified adjusted gross income between $40,000 ($80,000 for married taxpayers filing jointly) and $50,000 ($100,000 for married taxpayers filing jointly). Taxpayers with modified adjusted gross income over $50,000 ($100,000 for married taxpayers filing jointly) may not claim a Lifetime Learning Credit. The modified adjusted gross income limitation will be indexed for inflation in 2002 and years thereafter. The definition of modified adjusted gross income is the same as it is for purposes of the Hope Scholarship Credit.

The Lifetime Learning Credit may be claimed for payments of qualified tuition and related expenses made on or after July 1, 1998, for academic periods beginning on or after July 1, 1998. Therefore, the first time taxpayers will be able to claim the credit will be when they file their 1998 tax returns in 1999. The Lifetime Learning Credit is not available for any amount paid in 1997.

Answer 2

You're thinking of the Hope Credit. If you pay tuition to an accredited institution, you will get a Form 1098T in January. Payment includes taking out any loans as well. If you paid the tuition (and it is not covered by tax-free grants or scholarships) you can deduct a maximum of $1650.00 off your tax bill. It will not reduce your tax bill beyond zero though. In other words, it will not, by itself, create a refund.

You have to be in a degree program, at least half-time. You get 100% of the first $1,100 expenses and 50% of the next $1,100. You must be no higher than a Freshman or Sophomore by January 1st in the year you are claiming for, so if you were either of those on 1.1.06, you meet that condition. You can only claim the Hope Credit for two tax years, even if it takes you longer to go beyond Sophomore year.

If you can be claimed as a dependent of someone else, and they paid your tuition, that person should claim the relief, if they qualify.

Someone else has already covered the Lifetime Learning Credit which, as the term suggests, lasts a whole lot longer than the Hope Credit.

Answer 3

Basically,
1) during 1st 2 years of school use the hope credit or income adjustment (whichever works out better--you must be at least a 1/2 time student).
2) after 1st 2 years of school use the lifetime learning credit or income adjustment (whichever works out better).
3) If you are a dependent, your parents should take the credit/adjustment. HOWEVER, IF THEY MAKE TOO MUCH, it might work out better for them to waive taking you as a dependent so you can take the credit (you CANNOT take your dependency exemption, but you can take the credit if they don't take you as a dependent). This is within the current tax law.

Note: If you cashed in savings bonds or an IRA to fund college, you have to see if it works out better to take the credit/adjustment, not being taxed on the savings bond interest, or paying the 10% penalty on early IRA withdrawal. You can't "double dip", you have to chose which is best.

Answer 4

What replaced into your income? Can somebody else declare you? once you have not any income, you'll haven't any reason to declare a toddler tax credit. If somebody else can declare you, you could not declare dependents of your human being.

Answer 5

There is a tax exemption for schooling. It depends on how much money you make. I'm not sure of the details, but if you go to the IRS website I bet you could search on it.

Good luck.

Answer 6

on books??

I think my dad uses my book receipts to get a deduction.