Individual Tax Credits for Children and Education

Child Tax Credit

Taxpayers who have one or more qualifying children (child must not have attended the age of 17 by the end of the year and meets the dependency exemption requirements) may be entitled to a child tax credit of $1,000 per child through 2010. However, beginning in 2011, the credit decreases to $500 per qualifying child. This is the current tax law and is subject to change with a new President and Congress. The credit begins to phase out when the adjusted gross income as specially modified exceeds $110,000 for joint filers, and $75,000 for single taxpayers.

Credits for Higher Education Tuition

There are two education-related credits: the Hope credit and the Lifetime Learning credit.

The Hope credit amount per eligible student is equal to 100 percent of the first $1,200 of qualified tuition expenses and 50 perent of the second $1,200 of qualified tuition paid during the year. An eligible student for the Hope credit is any individual who: has not elected to claim the Hope credit in any two earlier years, has not completed the first two years of postsecondary education before the beginning of the current tax year, is enrolled at least half-time in a program that leads to a degree certificate, or recognized educational credentials. Also, the individual can not have a conviction of any Federal or State felony class drug offense for possession or distribution.

The Lifetime Learning credit is equal to 20 percent of the amount of qualified tuition expenses paid on the first $10,000 of tuition.

An eligible student for the credit is a student who is enrolled in one or more courses at a qualified educational institution.

The allowable amount of credit is reduced for taxpayers who have a modified gross income above certain amounts. For single taxpayers the phaseout of the credit begins when modified AGI reaches $48,000 for 2008 and $50,000 for 2009. For joint filiers the phaseout range starts at $96,000 for 2008 and $100,000 for 2009. The Hope and Lifetime Learning Credits are not available to married taxpayers who file seperate returns.