Lesson 8

1. Lesson 8 Education Credits

2. Objectives • Determine who is eligible to claim the credit • Determine which credit should be claimed • Determine what effect the GOZ Act of 2005 had on these credits

3. Intake and Interview Process Form 13614 – Intake and Interview Sheet - Credits Section

4. General Requirements • The taxpayer can not file Married Filing Separate • Have qualified expenses • Have an eligible student • Eligible student must attend eligible institution • Phase Out: • $90,000-$110,000 Married Filing Joint (MFJ) • $45,000-$55,000 Others

5. Hope Credit • Can be claimed for each eligible student • Maximum is $1,650 credit per student ($3,300 for GOZ Student) • Applies to the first two taxable years of postsecondary education • Calculated in Part I of Form 8863 • Can be claimed on Form 1040A or Form 1040

6. Lifetime Learning Credit • Based on the total of qualified expenses, not the number of eligible students • The maximum credit is $4,000 (for GOZ Students) or $2,000 per year for regular students • The credit is figured in Part II of Form 8863 • The credit can be claimed on Form 1040A or Form 1040

7. Quality Review (QR) Form 8158 – Quality Review Checklist Adjustments, Deductions and Credits Section

8. Lesson Summary • A taxpayer cannot: • Deduct higher education expenses and also claim a Hope or Lifetime Learning Credit based on the same expenses, • Claim a Hope Credit and a Lifetime Learning Credit based on the same qualified education expenses, or • Claim a credit based on expenses paid with tax-free scholarship, grant, or employer-provided educational assistance.