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 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.
The Hope Scholarship Tax Credit may be claimed for the qualified tuition and related expenses of each student in the taxpayer’s family who is enrolled at least half-time in one of the first two years of postsecondary education and who is enrolled in a program leading to a degree, certificate, or other recognized educational credential.
The Savings Bond education tax exclusion permits qualified taxpayers to exclude from their gross income all or a portion of the interest earned on the redemption of eligible Series EE and I Bonds issued after 1989 in the name of a taxpayer age 24 or older at the date of issuance. To qualify for this exclusion, tuition and other educational expenses must be incurred by the taxpayer, the taxpayer’s spouse, or the taxpayer’s dependent at certain post-secondary educational institutions.