Hope education credit

Hope education credit

Host : Wasn't another "targeted" tax cut in the area of education?

David : Right. actually there are several things to help pay for college.

The first and perhaps best of these is called the Hope credit. This again is a credit so it reduces your tax liability dollar-for-dollar, as long as you have a tax liability.

You can use this credit to pay for 100 percent of the first $1,000 of secondary education, and 50 percent of the second $1,000 of college tuition. So you can cut your taxes by $1,500 for the first and second year of college.

Host : Do these Hope credits phase out as well?

David : Right. Here the phase-out is lower than for the child credit. If you're single, the benefit begins to disappear at $40,000 of income. Joint filers see the credit vanish beginning at $80,000.