HOPE

EDUCATION CREDIT

Thanks to

the Taxpayer Relief Act of 1997, which authorized the

HOPE

Scholarship

tax credit, families can claim an annual tax credit of up

to $1,500 for each of the first two years of college for

each eligible student.

An eligible

student is one who is carrying at least one-half the

normal full-time course load at a qualified educational

institution and is enrolled in a degree program. Eligible

expenses include tuition and required fees, but not

books, nor room and board.

The HOPE

credit equals 100 percent of the first $1,000 of expenses

and 50 percent of the next $1,000 of expenses, per

student per tax year. You're allowed as many HOPE credits

as you have family members who qualify.

The credit

is phased out for higher income taxpayers. If you are

married and filing jointly, the phase-out is between

$80,000 and $100,000 of your AGI.

If you are

single, the phase-out is between $40,000 and $50,000.

LIFETIME

LEARNING CREDIT

College

juniors, seniors, graduate, and professional degree and

non-degree students, as well as adults who want to return

to school, change careers, or upgrade their skills are

eligible for the Lifetime Learning Credit.

For 1999,

the Lifetime Learning Credit is equal to 20 percent of

the first $5,000 of qualified tuition and fees. The

credit is available on a per-taxpayer (family) basis, and

is phased out at the same income levels as the HOPE

Scholarship. Thus, the maximum 1999 credit that you may

claim is $1,000.

You cannot

use both the HOPE Scholarship Credit and the Lifetime

Learning Credit for a single student. However, you can

claim the HOPE Credit for one student and the Lifetime

Learning Credit for another.

CREDIT FOR

DEPENDENT CARE EXPENSES

The

Dependent Care Credit is designed to help defray the

costs of caring for children who are under 13 or are

handicapped, while you and your spouse work. The credit,

which is computed as a percentage of your qualifying

expenses during the year, ranges from a low of 20 percent

to a high of 30 percent of expenses.

The

percentage is based on your AGI. You may apply the credit

only to expenses of up to $2,400 for one dependent and

$4,800 for two or more dependents.

If your

employer offers a dependent-care Flexible Spending

Account (FSA), you cannot use both the FSA and the Child

Care Credit. Dependent care FSAs are generally more

advantageous from a tax perspective, but you should do an

actual comparison to determine which provides the greater

tax benefit to you.

ADOPTION

CREDIT

Adoptive

parents may be able to claim a one-time tax credit of up

to $5,000 for each adopted child under age 17, for

qualified adoption expenses. Those who adopt children

with special needs get an extra $1,000 tax break.

Parents who

adopt children abroad can take the same $5,000 tax

credit, although they are not eligible for the $6,000

credit even if the foreign child is a special-needs

child.

Special

rules apply to the timing of your deductions.

Qualified

adoption expenses include "reasonable and

necessary" adoption fees, court costs, attorney's

fees, traveling expenses (including meals and lodging),

and even home renovation expenses that are required by

the state to meet the needs of the child.

As with

most tax credits, there are phase-outs at certain income

levels. The adoption credit is phased out ratably with

modified AGI of between $75,000 and $115,000. The credits

are completely phased out for taxpayers with AGIs of

$115,000 or more.

The rules

governing child-related tax credits can be complex. If

you need help determining how to apply these credits, you

may want to consult with a CPA for advice.

The GSCPA

is the premier professional organization for CPAs in the

state of Georgia. With over 9,900 members throughout the

state, the purpose of the GSCPA is to promote the study

of accountancy and applicable laws, provide continuing

professional education, maintain high ethical and work

standards, and provide information about accounting

issues to the membership and the public. For more

information, access our web site at www.gscpa.org .