Two types of tax credits are now available for education - the Hope Scholarship 
credit and the Lifetime Learning credit. 

The Hope Scholarship credit is available for each of the first two years of
college. The student must attend school at least half time. If there is more 
than one student in a taxpayer's family, a credit can be claimed for each. 
The credit equals 100% of the first $1,000 and 50% of the next $1,000 of 
tuition and fees, for a maximum of $1,500 a year per student. 

The Lifetime Learning credit is available for up to 20% of qualified tuition 
and fees (to a maximum of $5,000). The maximum credit, therefore, is $1,000 
per year per taxpayer. This credit applies only to expenses paid after June 
30, 1998, through the year 2002. After that, the credit equals 20% of up to
$10,000 in tuition and fees, for a maximum of $2,000 per taxpayer. 

The Lifetime Learning credit can be used for undergraduate or graduate
courses, as well as courses at an eligible institution in which the student 
acquires or improves job skills. Note that the Lifetime Learning credit can 
be claimed only once on each tax return, no matter how many students are in 
a taxpayer's family, but it can be claimed for an unlimited number of years. 
Moreover, the minimum half-time requirement of the Hope Scholarship credit 
does not apply to the Lifetime Learning credit. 

For both types of credit, the full amount is available for single taxpayers 
with AGI of $40,000 or less ($80,000 for joint returns). After that, the credit
gradually phases out until AGI reaches $50,000 ($100,000 for joint returns). 

The two credits cannot be taken at the same time for the same student, nor 
can they be taken in a year in which a distribution is received from an 
Education IRA.