Reduce Tuition and Fee Cost
The following are links to information regarding two income tax credits that you and your family may find useful:
Hope Tax Credit
Lifetime Learning Credit
Recent changes in the tax code allow you to reduce you tax liability with as much as a $1,500 tax credit each year for the first two years of college. A tax credit is a dollar for dollar reduction of your tax liability. Suppose when you finish filling out your tax return, the form indicates that you owe $2,000 in taxes to the federal government. The Hope Tax Credit will allow you to reduce this tax liability by as much as $1,500. $2,000 taxes owed - $1,500 tax credit = $500 taxes owed after applying the credit. The savings are significant.
For the typical, resident, first year student, tuition and fees for fall 2000 are $1,207. Apply the Hope Tax Credit: 100% of the first $1,000, and 50% of the next $1,000 not to exceed a total tax credit of $1,500 for the tax year. This comes out to be $1,000 + (.5 x $207) = $1,103.50 tax credit for the year 2000. After tax tuition and fees for the fall semester end up being $103.50.
Spring semester begins a new tax year for most folks, so another $1500 maximum tax credit is available for 2001. Assuming tuition remains unchanged (unlikely), again your after tax tuition and fees for the spring semester 2001 would end up being $103.50. Your first year of college winds up costing you $207.00 for tuition and fees after taxes. Not too bad.