• Higher Education Credit (Replaces Hope Credit)
  • Applies to students in the first four years an accredited post secondary institution.
  • Can be taken for each eligible student in the family
  • Provides a maximum allowable credit of $2,500 per student, which 40% if refundable.
  • Credit applies to the student's first four years of post-secondary education
  • Eligible students are the taxpayer, spouse, or individual claimed as a dependent
  • The credit is not allowed for convicted drug offenders
  • Subject to phase-out for adjusted gross income (AGI) in excess of $80,000 ($160,000 for married filing jointly).
    
    
• Lifetime Learning Credit
  • Covers tuition and fees at an eligible educational institution to improve job skills
  • Available for undergraduate, graduate or professional courses
  • Maximum credit is $2,000 per taxpayer
    
    
    • Note: For any tax year, a taxpayer is permitted to elect only one of the following with respect to one student (1) the Higher Education credit, (2) the lifetime learning credit, or (3) the exclusion for distributions from an education IRA used to pay higher education costs. For most taxpayers, both of these credits are subject to income phaseouts when AGI reaches $50,000. The credits are completely phased out when modified AGI reaches $56,000. For joint filers, the phaseout range is $100,000 - $120,000.
      
      
• Student Loan Interest
  • $2,500 maximum deduction allowed on student loans
  • Allowed for all interest paid on student loan during the year, both required and voluntary payments.
  • The deduction only applies to qualified education loans
    
    
    • Note: This is not a tax credit, which means it will not be applied against your tax liability to reduce the amount of tax you are paying. Student loan interest is a deduction that reduces your taxable income. This deduction is subject to income phaseouts after modified AGI reaches $60,000 - $75,000. For married filing jointly taxpayers, the phaseout range is $120,000 - $150,000.
      

Child Tax Credits
Allows $1,000 credit per each qualifying child. The child tax credit is a non-refundable tax credit, which means that it cannot reduce your tax liability below zero. There is an exception to this rule if the taxpayer has three or more qualifying children.

• To qualify as a dependent for this credit, the taxpayer must meet all five of the following requirements.
  
  1. Identification - Name and valid social security number for each child.
  
  2. Dependency - Taxpayer must be entitled to dependency deduction.
  
  3. Relationship - Child must bear relationship to the taxpayer (daughter, son, etc.)
  
  4. Age - Child must be under 17 at the close of the calendar year.
  
  5. Citizenship - Child must be a citizen of the United States.
  
  
• The child tax credit begins to phase out when modified adjusted income (AGI) reaches $110,000 for joint filers, $55,000 for married taxpayers filing separately, and $75,000 for single taxpayers. The credit is reduced by $50 for each $1,000 of modified AGI above the threshold.
  

Earned Income Credit
This credit is available to individuals whose income (both taxable and nontaxable earned income) (and modified adjusted gross income) are both less than a certain amount. Also you cannot take the credit if your investment income is more than $2,950 (2008).

• For those without a qualifying child the amount is $12,800 (2008)
• For those with one qualifying child the amount is $33,995 (2008)
• For those with more than one qualifying child, $38,646 (2008).