Taxpayer who is claiming the student as a dependent and paid qualified educational expenses for a student. Credit is available for as many students who qualify per taxpayer. Students, if they are not claimed as a dependent on another taxpayer's return. Taxpayers claiming students as dependents are entitled to the full credit earned even if they do not pay all the qualified expenses for the student. The upper limits will be adjusted for inflation after 2001.
Student is in first two academic years of study at an eligible higher education institution.
The credit will be adjusted for inflation, beginning after the year 2001. No expenses paid in 1997 will qualify. The credit must be claimed in the tax year in which the payment of qualified expenses is made, e.g. tuition paid in the Fall of year I for an academic program in Spring of year 2 can only be claimed on the tax return for year 1. Schools must report to the IRS for every student enrolled, regardless of whether they qualify for a tax credit, or not. Compliments of Tuition Management Systems.