lectur8-page20

lectur8-page20 - $1,207 Apply the Hope Tax Credit 100 of...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Reduce Tuition and Fee Cost u The following are links to information regarding two income tax credits that you and your family may find useful: u Hope Tax Credit u Lifetime Learning Credit u More Details 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
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: $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....
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online