There are two credits available for 1998, The Hope Scholarship Credit and the Lifetime Learning Credit. You can claim only one of the credits for each eligible student.

The amount of the credit is determined by the amount you pay for qualified tuition and related expenses paid for each eligible student and the amount of your modified adjusted gross income (AGI).

Expenses that qualify are tuition and fees required for enrollment or attendance at any college, vocational school, or other post-secondary educational institution eligible to participate in the student aid programs administered by the Department of Education.

Qualified expenses do not include books, room and board, student activities, athletics (unless the course is part of the student's degree program), insurance, equipment, transportation, or other similar personal, living, or family expenses.

You can claim a Hope Credit for an eligible student who is:

1. Enrolled in one of the first two years of post-secondary education (generally freshman or sophomore years of college).
2. Enrolled in a program that leads to a degree, certificate, or other recognized educational credential.
3. Is taking at least one-half of the normal full-time work load for the course of study for at least one academic period beginning during the calendar year.
4. Is free of any felony conviction for possessing or distributing a controlled substance (drugs).

An eligible student can be you, your spouse, or an eligible dependent. The maximum credit per student is $1,500 (100% of the first $1,000 of qualified tuition and related expenses, plus 50% of the next $1,000 of such expenses), a maximum of $2,000 in expenses.

The credit is gradually reduced if your modified adjusted gross income is between $40,000 and $50,000 ($80,000 and $100,000 in the case of a joint return). The credit cannot be claimed if your modified AGI is above these limits. Credit cannot be claimed if the individual is married filing a separate return.

A lifetime Learning Credit can be claimed for eligible students if:

1. The lifetime learning credit is not based on the student's workload. It is allowed for one or more courses.
2. The credit is not limited to students in the first two years of post-secondary education.
3. Expenses for graduate level degree work, are eligible.
4. There is no maximum period for which the credit can be claimed for each eligible student.
5. The amount you can claim as a credit does not vary (increase) based on the number of eligible students for who you pay qualified expenses.

An eligible student can be you, your spouse, or an eligible dependent. The amount of the lifetime learning credit is 20% of the first $5,000 you paid for qualified tuition and related expenses for all eligible students in the family.

The maximum amount of credit you can claim for 1998 is $1,000 (20% times $5,000). However, that amount may be reduced based on your modified AGI.

The credit is gradually reduced if your modified AGI is between $40,000 and $50,000 ($80,000 and $100,000 in the case of a joint return). The credit cannot be claimed if you are married filing a separate return.

For additional information on education credits, see Publication 970, Tax Benefits for Higher Education. Publications can be downloaded from this site, or ordered by calling 1-800-829-3676.

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