December 22, 2011

Education-Related Credits and Deduction Phaseout

1)American Opportunity Credit - The American Opportunity credit is a modification of the Hope scholarship credit for tax years beginning after December 31, 2008, but before January 1, 2013.  The credit amount is the sum of 100 percent of the first $2,000 of qualified tuition and related expenses, for a total maximum credit of $2,500 per eligible student per year.  The credit is available for the first four years of a student's post-secondary education.
2)Hope Scholarship Credit - For tax years other than 2009, 2010, 2011, and 2012, the Hope scholarship credit amount per eligible student is equal to 100 percent of the first $1,000 of qualified tuition expenses and 50 percent of the second $1,000 of qualified tuition paid during the year, indexed for inflation.
3)Lifetime Learning Credit - 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 amount which is not inflation adjusted...The phaseout of the credits begins for single taxpayers in 2011 when modified AGI reaches $51,000 and completely phases out when modified AGI reaches $61,000.  For joint filers, the phaseout range is $102,000 to $122,000 in 2011.
4)Deduction for Education Expenses - This deduction will not apply to tax years beginning after 2011.
Source: 2012 U.S. Master Tax Guide, Paragraph's 1082 & 1303

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