The Taxpayer Relief Act in 1997 created two federal tax credits for postsecondary education expenses. One, the Hope Scholarship Credit, can be claimed for each student in the family for two taxable years for expenses incurred attending a qualified education program. The other, the Lifetime Learning Credit, provides a 20 percent credit for the first $5,000 of qualified fees. The credit is available for any number of years and for any level of postsecondary education. This article explains the rationale for and effect of these higher education credits.
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