Comparison of Lifetime Learning Credit and Hope Credit

Another tax credit that is available for education expenses is the Hope Credit. You can take either the Hope Credit or the Lifetime Learning Credit for each eligible person in one year. If you paid qualified education expenses for more than one student in the same year, you can choose to take either of the credits on a per-student, per-year basis. For example, you could claim the Hope credit for one student and the Lifetime Learning Credit for another student in the same year. You may want to do the calculations for both credits for each student, to see which gives you the most tax benefit.

The following are some of the basic differences between the Hope Credit and the Lifetime Learning Credit:

• The Lifetime Learning Credit allows you to take a credit of 20% of qualified tuition and related expenses up to $10,000 per year, for a total credit of $2,000 for all eligible students on each annual tax return. The Hope Credit allows you to take a credit of up to $1,500 per student, per year.
• The Lifetime Learning Credit is available for all years of postsecondary education and for courses to acquire or improve job skills. The Hope Credit is available only for the first 2 years of postsecondary education.
• The Lifetime Learning Credit is available for an unlimited number of years, while the Hope Credit is available only for 2 years per eligible student.
• For the Lifetime Learning Credit, the student does not have to be pursuing a degree or other credential. For the Hope Credit, the student must be pursuing an undergraduate degree or other credential.
• The Lifetime Learning Credit is available for one or more courses. For the Hope Credit, the student must be enrolled at least half time for at least one academic period beginning during the year.