On the Save Money Blog, we’re always looking for ways to help our visitors save money. We recently published an article discussing how tax credits can help you save money. We would like to add to that discussion by talking about the Hope tax credit.

Those with kids beginning classes in 2008, the Hope Tax credit is not going anywhere. You can benefit from the tax break next year. For everyone else, let’s dig into the benefits of this program.

The Hope tax credit can effectively lower the amount you pay out for taxes this year. This tax credit can be used if you earned less than $55,000 as an individual and $110,000 as a couple.

According to an IRS Summertime Tax tip publication:

The Hope Credit, Lifetime Learning Credit or the Tuition and Fees Deduction may help offset the cost of higher education for you, your spouse and your dependents.

The amount of these credits and deductions are based on the qualified education expenses, such as college or vocational school tuition and enrollment fees, that you paid during the year and may be limited by your modified adjusted gross income. Room and board, insurance or personal living expenses are not considered qualified education expenses.

The Hope Credit, which is up to a $1,650 tax credit per student per year, is available for only the first two years of college or vocational school. [Source: IRS Publication]

So the Hope tax credit can be used for anyone in your family and for up to the $1,650 limit. This would definitely help many families save money on taxes. The Hope Credit is only available for the first two years of schooling per student. If you have a child starting at a University in 2007, then this credit should benefit you.

Do you understand a tax credit? Many misunderstand them. It’s common to think it will lower tax liability. In actuality, the tax credit reduces the overall tax by the amount paid. It’s quite beneficial moreso than simply writing off the expense. This is basically the government’s way of saying they understand you paid a portion of your taxes owed already.

The IRS Publication 970 details many education tax programs and how they affect you. Be sure to read the most up-to-date information before filing your 2007 taxes. It may save you money!

Remember, if you have questions about tax credits, filing taxes, or anything else to save you money on your taxes feel free to ask in the comments or in our forums.