The Hope credit is one way to qualify for a tax cut to cover college tuition costs. The Hope credit is contingent on the amount of income that the person earns as adjusted. It is truly a tax credit and not a deduction. Tax credits are calculated based on how much tax an individual taxpayer has to pay. In the case of each person who qualifies for Hope credit, the maximum amount one could receive is $1650. The limit is two years of your Hope credit. So, taxpayers are not able to use the credit after the two first years of the pupil’s academics.
The second type of tuition tax credit a taxpayer can use is The Lifetime Learning credit. It does not come with the two-year limitation. This credit is distinct from that of the Hope credit. Taxpayers can take a 10 percent deduction for the first $10,000 they invest for tuition. Maximum credit of 22,000 dollars is permitted. Neither one of these credits are refundable. That means they will reduce the amount of taxes a taxpayer must pay, however, they won’t leave taxpayers with a cash refund in the end.