Educational Tax Credits
With the Hope Credit and Lifetime Learning Credit, students who are paying for college are allowed to take a tax break for qualified expenses. There are certain rules that apply to both credits which eliminate all qualified expenses paid by tax-free funds. If you pay higher education expenses with certain tax-free funds, you cannot claim a credit for those amounts. Tax-free funds could include scholarships, Pell grants, employer-provided educational assistance, veterans- educational assistance, and any other nontaxable payments received for educational expenses.
Keep this in mind when filing your taxes.
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