Tax Credits Available

Along with the Education IRAs and the new California trust program, a number of other tax credit programs are available to parents, who should consult their tax advisor for details.

These include:

* Hope Scholarship Credit. Taxpayers with children in their first two years of college and household modified adjusted gross incomes under $50,000 qualify to take up to a $1,500 tax credit, depending on their out-of-pocket college expenses.

* Lifetime Learning Credit: Similar to the Hope Scholarship Credit, but intended for families with children past the second year of college, this gives parents a credit of up to 20% of the first $5,000 in out-of-pocket expenses.

Similar income requirements apply.

The two programs cannot be used simultaneously.

* A new tax credit that will start at $400 per child this year and increase to $500 in 1999 also can be used for college savings.

Financial planners say this is an easy way to fund the Education IRA for the year.

In creating these tax incentives, legislators “are saying ‘We want your kids educated. We’re not going to pay for it but we’re going to give you some help to do it,’ ” said financial planner Russ Charvonia, adding that it is essential to take advantage of every tax break offered.