DEFINITION of 'Education Credit'

A type of tax credit available to students of a post-secondary educational institution, such as a college or university. Education credits may be claimed by those who incur qualifying educational expenses, such as tuition and fees. Parents who pay these expenses for their children may be able to claim this type of credit on their tax returns, subject to certain income restrictions.

BREAKING DOWN 'Education Credit'

There are two types of education credits, the Hope Credit and the Lifetime Learning Credit. The Hope Credit applies to first and second year postsecondary students, with certain restrictions. The Lifetime Learning Credit applies to all students at the undergraduate or graduate level. You cannot claim both the Hope and Lifetime Learning Credits for the same student in the same year.

RELATED TERMS
  1. Lifetime Learning Credit

    A provision of the U.S. federal income tax code that lets parents ...
  2. Hope Credit

    A nonrefundable education tax credit that can be claimed for ...
  3. American Opportunity Tax Credit

    A tax credit that enabled more student and parents to pay for ...
  4. IRS Publication 970

    A document published by the Internal Revenue Service (IRS) that ...
  5. Business Tax Credits

    A number of federal income tax credits available to businesses ...
  6. Credit Rating

    An assessment of the creditworthiness of a borrower in general ...
Related Articles
  1. Taxes

    A Look at the Cost and Tax Treatment of College

    Is there more we can do to improve the affordability of post-secondary education? We take a look at how students and colleges are taxed today.
  2. Taxes

    Top Tax Refunds For Recent Grads

    Don't miss out on these tax credits if you have recently graduated.
  3. Taxes

    Money-Saving Tax Breaks For College Grads

    Even if you graduate from college with a heavy debt load – especially if you do – use these tax benefits to ease your transition into the 'real world.'
  4. Taxes

    Give Your Taxes Some Credit

    A few tax credits can greatly increase the amount of money you get back on your return.
  5. Personal Finance

    5 Most Affordable Online Colleges in 2016

    Learn why more students are turning to online postsecondary education and discover the top five online colleges and universities for 2016.
  6. Taxes

    5 Tax Credits You Shouldn't Miss

    If you're not taking advantage of these deductions, you could be missing out on tax savings.
  7. Personal Finance

    Last-Minute Strategies To Help Pay For College

    Find out what to do when your kid is ready for higher education, but you aren't.
  8. Personal Finance

    5 Worst Money Mistakes You Can Make In College

    Watch out for these costly mistakes while in school.
  9. Personal Finance

    Student Debt Passes $1 Trillion: Is College Worth the Investment?

    As tuition rises faster than any other U.S. commodity in the past few decades, students explore alternative education options supported by new technology.
  10. Personal Finance

    Four Critical Financial Decisions Facing College Students

    The financial decisions students make in college can affect academic achievement, well-being and post-graduate success.
RELATED FAQS
  1. Is it possible to have a credit limit that's too high?

    Avoid these pitfalls when working with high credit limits, and learn how to increase your credit score by increasing your ... Read Answer >>
  2. What are some good alternatives to taking out a line of credit?

    Read more about how opening a line of credit might not be the best answer for you and determine available alternatives if ... Read Answer >>
  3. What is the difference between bad credit and no credit?

    The answer to this question will depend on what information (if any) is found on your credit report, such as any bankruptcy ... Read Answer >>
  4. What is the difference between a loan and a line of credit?

    Learn to differentiate between lines of credit and standard loans, and determine when you are likely to use each method of ... Read Answer >>
  5. Why don't I have a credit score?

    Learn about some of the reasons why you might not have a credit score, and find out how you can build a good credit score ... Read Answer >>
Hot Definitions
  1. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  2. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  3. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  4. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
  5. Yuppie

    Yuppie is a slang term denoting the market segment of young urban professionals. A yuppie is often characterized by youth, ...
  6. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
Trading Center