What are the Hope credit and the Lifetime Learning credit? Answer: The Hope credit and the Lifetime Learning credit are tax credits for taxpayers who pay certain higher education costs. These credits depend on the amount of qualified tuition and related expenses you paid in a given year, as well as the level of your modified adjusted gross income (MAGI). The credits are available for qualified education expenses that you, your spouse, or your dependent incur at an eligible educational institution. The IRS has provided specific guidance regarding the definitions of eligible educational institution and qualified expenses. To be eligible for a full Hope credit or Lifetime Learning credit, your MAGI in 2004 cannot exceed $42,000, $85,000 for married persons filing jointly. A partial credit is available if your MAGI falls between $42,000 and $52,000 ($85,000 and $105,000 for married persons filing jointly). These credits are not available to you if your filing status is married filing separately. The Hope credit is worth up to $1,500 per student for qualified tuition and related expenses incurred during the first two years of post-secondary education. The credit does not apply to graduate or professional-level courses. To qualify for the Hope credit, you must be enrolled in a degree or certificate program at least half-time, and you must not have a felony drug conviction. The credit is available for each eligible student in the household. The Lifetime Learning credit is worth up to $2,000 per year for qualified tuition and related expenses incurred for course work at eligible educational institutions. The credit is not limited to the first two years of school, and you need only be enrolled in one or more courses to qualify. The credit is also available for graduate and professional-level courses. Furthermore, courses related to sports, games, or hobbies may qualify if they are part of a course of instruction to acquire or improve job skills. The Lifetime Learning credit is equal to 20 percent of the first $10,000 of your qualified tuition and related expenses, up to a maximum credit of $2,000 per tax return. Be aware that you cannot claim both credits for the same student in the same year. For additional information, see IRS Publication 970 or consult a tax professional.