The personal credits--which consist of the child and dependent care credit (3); the credit for the elderly and the permanently and totally disabled (4); the qualified adoption credit; (5); the nonrefundable portion of the child tax credit (6); the Hope Scholarship and
Lifetime Learning credits (7) (see Q 1438); the credit for elective deferrals and IRA contributions (the "saver's credit," which became permanent under PPA 2006 (8));
No comparable requirement exists for the
Lifetime Learning Credit.
13767-12s, filed July 18,2013) claimed the
Lifetime Learning Credit based on a six-page account summary statement received from her university as proof of her education credits.
A taxpayer is allowed a credit against the tax imposed for an amount equal to the sum of the Hope Scholarship Credit and the
Lifetime Learning Credit. The Hope credit is limited to 100 percent of the first $1,000 and 50 percent cf the next $1,000 of qualified tuition and fees, amounting to a $1,500 credit for each child attending a post-secondary institution.
Back in 1997, the federal Taxpayer Relief Act provided for the Hope Scholarship and
Lifetime Learning Credits as a means of opening the doors of college to a new generation, with the largest investment in higher education since the 1956 G.I.
Implications: Eligible nonrefundable personal tax credits include the dependent care credit, the credit for the elderly and disabled, the adoption credit, the child credit, the credit for interest on certain home mortgages, the Hope scholarship and
lifetime learning credits, the credit for savers, the credit for certain nonbusiness energy property, the credit for residential energy-efficient property, and the DC first-time homebuyer credit.
For example, while most community colleges don't charge much more than $2,000 for tuition, only families that spend more than $10,000 a year on tuition get full benefit from the
Lifetime Learning Credit, she said.
He can also take advantage of the academic costs he is incurring by using the $2,000
Lifetime Learning Credit available to graduate students beyond the first two years of college or professionals attending classes parttime to improve or upgrade their job skills.
New rules also allow a taxpayer to claim a Hope credit or
lifetime learning credit for the same year they use the education savings account provided the distribution is not used for the same education expenses for which a credit was claimed.
Lifetime Learning Credit While the American Opportunity Tax Credit allows a credit for qualified education expenses for the first four years of college, the
Lifetime Learning Credit (under IRC section 25A) allows a credit for undergraduate, graduate, and job skills courses.
A taxpayer may claim a Hope or
lifetime learning credit for a tax year and exclude from income amounts distributed from QTPs on behalf of the same student, as long as the distribution is not used for the same expenses.
Generally taxpayers may claim a Hope Credit of $1,500 (adjusted to $1,650 in 2006) and a
Lifetime Learning Credit of $2,000.
