Several new tax benefits are available to help families meet the cost of postsecondary education. These tax benefits are intended to help students and their parents as well as all working Americans to fulfill a variety of educational objectives.

Education expenses paid with loans are eligible for both the Hope Scholarship and Lifetime Learning Tax Credits. Education expenses paid with tax-free grants, scholarships, and employer-education assistance are NOT eligible for either tax credit.

The Hope Scholarship is actually a tax credit, not a scholarship. Tax credits are subtracted directly from the tax a family owes, rather than reducing taxable income like a tax deduction.

A family may claim a tax credit of up to $1,500 per tax year for each eligible dependent. This can be done for up to two tax years. A family may claim up to 100% of the first $1,000 of eligible expenses and 50% of the next $1,000 for a maximum credit of $1,500.

The actual amount of the credit depends on the family’s income, the amount of qualified tuition and fees paid, and the amount of certain scholarships and allowances subtracted from tuition. The total maximum credit also is based on the number of eligible dependents.

To be eligible, a student must be enrolled at least halftime in an eligible program leading to a degree or certificate. The student cannot have had a drug felony conviction in a year that the tax credit applies.

This credit applies to tuition and fees for undergraduate, graduate, and continuing education coursework. A family can claim on its tax return a credit equal to 20% of $10,000 of educational expenses; so the maximum benefit is $2,000 each tax year. Eligible education expenses are offset by scholarships, grants, and other tax-free tuition benefits.

The taxpayer must claim the eligible student as a dependent, unless the credit is for the taxpayer or the taxpayer’s spouse. The taxpayer is eligible for the maximum benefit with an Adjusted Gross Income (AGI) of up to $52,000 for a single taxpayer (or $105,000 for married taxpayers). The credit amount is phased out between $52,000 and $62,000 for single taxpayers (or $105,000 and $125,000 for married taxpayers).

Other tax incentives include Education IRAs and IRA withdrawals for higher education expenses. College graduates or their families can also deduct student loan interest payments on the first sixty months of the loan payments.

For more information regarding eligibility for the Hope Scholarship, Lifelong Learning Tax Credit, or any of the other tax incentives, please contact your tax preparer or the IRS.

Educational programs for veteran students and eligible dependents are administered by the State of Illinois Veterans Affairs Office and the Illinois Student Assistance Commission. Applications, processing, monitoring, and reporting are accomplished in the Office of Financial Aid at Kaskaskia College.

All students receiving veteran educational benefits are required to meet the Financial Aid Satisfactory Academic Progress Standards. Students placed on Financial Aid Suspension will be ineligible for veteran educational benefits.