Students taking at least six credits in the first two years of college are eligible for the Hope Scholarship, a federal tax credit. A tax credit is subtracted from the amount of tax owed, unlike a tax deduction, which is subtracted from the amount of taxable income.
Under the Hope credit, a family may claim a tax credit of up to $1,500 of tuition and fees for each eligible student for up to two tax years. That figure consists of 100% of the first $1,000 of eligible expenses, and half of the next $1,000, for a maximum tax credit of $1,500 per student. The amount of the credit is affected by income, and the amount of scholarships, grants and untaxed income used to pay tuition and fees.
For those beyond the first two years of college, or taking classes part-time to improve or upgrade their job skills, the family will receive a 20% tax credit for first $5,000 of tuition and fees through 2002, and for the first $10,000 thereafter. The credit is available for net tuition and fees (less grant aid) on a per-taxpayer (family) basis. Like the Hope tax credit, higher-income families are not eligible.
For specific information, consult a tax advisor or visit https://studentaid.ed.gov/sa/types/tax-benefits .