You may be. There are two education tax credits--the Hope credit and the Lifetime Learning credit. To claim either credit in a given year (you cannot claim both in the same year), you must list your child as a dependent on your tax return. In addition, you must meet income limits. For 2004, a full credit (either Hope or Lifetime Learning) is available to single filers with a modified adjusted gross income (MAGI) below $42,000 and joint filers with an MAGI below $85,000. A partial credit is available to single filers with an MAGI between $42,000 and $52,000 and joint filers with an MAGI between $85,000 and $105,000.

Now, what credit might you be eligible for? The Hope credit applies only to your child's freshman and sophomore years of college. It is worth a maximum of $1,500 per year. It is calculated as 100 percent of the first $1,000 of your child's annual tuition and related expenses, plus 50 percent of the next $1,000 of such expenses. Because most students pay more than $2,000 in tuition costs each year, the credit is almost always worth $1,500. One final point: To qualify for the Hope credit, your child must be attending college on at least a half-time basis.

The Lifetime Learning credit is worth a maximum of $2,000 per year. It is calculated as 20 percent of the first $10,000 of your child's annual tuition and related expenses. Unlike the Hope credit, the Lifetime Learning credit is available even if your child is enrolled on less than a half-time basis, and it can apply to your child's junior and senior years of college.

If you are eligible to take the credits, remember that you cannot claim both credits in the same year. As a result, you will need to determine which credit offers you the most benefit in a given year. In this analysis, you must consider an important distinction between the two credits. The Hope credit can be taken for more than one child in a given year, provided each child qualifies independently. For example, if you have two children in college, one a freshman and the other a sophomore, you can take a $3,000 credit on your tax return. By contrast, the Lifetime Learning credit is limited to $2,000 per tax return, even if you have multiple children who would qualify independently in the same year.