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<TITLE>Hillman & Glorioso: Newsflash</TITLE>
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<TD WIDTH="500" COLSPAN="3" ALIGN=LEFT VALIGN=TOP> <FONT FACE="arial,helvetica,sans-serif" SIZE="1">Date
posted: <FONT COLOR="#336666">December 16, 1999<BR>
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<b>TAX CREDIT FOR HIGHER EDUCATION EXPENSES</b><BR>
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<p><br>
<font face="Arial, Helvetica, sans-serif" size="2">Two new tax credits,
the Hope scholarship credit and the lifetime learning credit, provide
taxpayers with a means of recovering some of the cost of post-secondary
education. Both credits are based on qualified tuition and related expenses
paid to an eligible educational institution. The Hope credit is limited
to $1,500 of qualified expenses per student, per year for the first
two years of school. Alternatively, the lifetime learning credit is
limited to 20% of up to $5,000 (20% of expenses up to $10,000 beginning
in 2003) of qualified expenses for each student, for each year of post-secondary
education. The lifetime learning credit is more liberal in that students
are not required to take a full course load and are not required to
be enrolled in a degree program. If courses are not part of a post-secondary
degree program, courses must be taken to improve job skills. The credits
are mutually exclusive. Only one, not both, of the credits may be claimed
in any one year. </font></p>
<p><font face="Arial, Helvetica, sans-serif" size="2">The bad news relating
to the credits is that they begin to phase out for most taxpayers when
modified adjusted gross income (adjusted gross income plus income earned
outside the U.S.) reaches $40,000 ($80,000 for married taxpayers filing
a joint return). The credits are completely phased out when modified
adjusted gross income reaches $50,000 ($100,000 for married taxpayers
filing a joint return). </font></p>
<p><font face="Arial, Helvetica, sans-serif" size="2">The good news relating
to the credits is that the Treasury Department has issued proposed regulations
saying that the credits follow dependency exemptions. Therefore if a
parent foregoes claiming a dependency exemption (which may be phased
out if their income is high), then the student may take either the Hope
scholarship credit or lifetime learning credit on his or her tax return.
In this situation, expenses paid on behalf of the student by others,
i.e. parents, are deemed to have been paid by the student.</font></p>
<p><font face="Arial, Helvetica, sans-serif" size="2"> For more information
on education credits, email <a href="mailto:[email protected]">[email protected]</a>
or call (703) 902-9600. </font></p>
<p><font face="Arial, Helvetica, sans-serif" size="2"><b>Laurie P. Barton,
CPA</b> </font><FONT FACE="arial,helvetica,sans-serif" SIZE="2"> <BR>
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