JANE BRYANT QUINN

On tax returns, this is the Year of the Child. If your children are young or in college, big write-offs are probably coming your way.

Here's what you might be eligible for:

? The new tax credit for children. You can subtract $400 from your taxes for each dependent child under 17 if you meet an income test. The full credit is available to married couples, filing jointly, with adjusted gross incomes of $110,000 or less, and singles with $75,000 or less.

The size of your tax credit shrinks by $50 for every additional $1,000 (or part thereof) you have in income. Exactly where it phases out depends on how many children you have. This tax credit covers all your dependent children natural, step, foster, adopted, even grandchildren.

? Two new tax credits for students in an accredited college or trade school. The Hope tax credit is for students in their first or second year of school. You're allowed as many credits as you have family members who qualify. They have to attend at least half time, and be in a program that leads to a certificate or degree.

The Hope credit allows you to slice up to $1,500 off your taxes to offset the cost of tuition and fees (but not room, board or books). It covers you and your spouse, if you're in school, as well as your dependent children.

The Lifetime Learning credit is usable in any year, by any student, of any age. It's available even for minimal study say, an adult-education course or a single course to improve your job skills.

This credit is worth up to $1,000 (20 percent of the first $5,000 paid in tuition and fees) for expenses starting July 1, 1998. You can take only one Lifetime Learning credit on your tax return. If there are two eligible students in your family, you still get only $1,000.

You can't use both the Hope and the Lifetime credit for a single student. But you can claim a Hope credit for one or more children, plus a Lifetime Learning credit for yet another child, on the same tax return.

Who qualifies for these education tax breaks? Married couples filing jointly get the full credit on adjusted gross incomes up to $80,000, phasing out at $100,000. Singles get the full credit with incomes up to $40,000, phasing out at $50,000.

Claim these credits on Form 8863. The IRS will crosscheck your claim with data it gets from the schools.

? A new tax deduction of up to $1,000 in interest paid on student loans, or parent loans for a dependent student. You get this write-off during the first 60 months of your repayment program. If you started making payments in January 1996, for example, you can take a deduction for 1998, 1999 and 2000. The interest deduction is granted even to taxpayers who don't itemize on their tax returns.

But be sure you pick the right return. You have to use Form 1040 or 1040A, not Form 1040EZ.

And there are income limits. Singles get the full deduction with incomes up to $40,000, phasing out at $55,000. For married couples filing jointly, it's $60,000, phasing out at $75,000.

? A larger standard deduction for dependent children with earnings or investment income of their own. This year, it's the greater of the following two possibilities: $700; or the child's earned income plus another $250 (as long as the total doesn't exceed $4,250). Note that children claim a personal exemption if they're listed as dependents on your tax return.

Beware 'notch' claims

"What is your opinion of the notch victim mail, which I have been receiving from two sources," writes reader Laurie Kerekes, 77, of Romulus, Mich. "Should I, on my limited income, contribute to the cause?"

If you're younger, you've probably never heard of the notch-baby controversy. But your parents may be getting these mailings, even though you don't.

The letters tell them they're victims who are being unfairly deprived of Social Security benefits. Recipients are urged to send money, so Congress can be lobbied to right this outrageous wrong.

But no wrong was done, so don't send money. The only victims are those who believe the mailings, and contribute to a "cause" that benefits only the fund-raisers.

The roots of the phony notch grievance lie in a good deed. Congress, in 1972, decided to link Social Security benefits to the consumer price index to preserve older people's purchasing power. But an error was made in the formula Congress approved for carrying out the law. It showed up in the first check that beneficiaries received when they went on the rolls.

This meant that ongoing benefits were higher than they should have been. Had that law stood, Social Security would have run out of money years ago. Congress corrected the formula in 1977.

So the windfall affected only retirees born roughly between 1910 and 1916. The extra money wasn't taken away from this lucky group. Congress felt it wouldn't be fair. They had innocently built that benefit into their budgets.

The lawmakers also decided to give a special break to the next group of retirees, who had presumably counted on getting similar benefits. Instead of restoring a proper (and lower) level of benefits all at once, they restored it slowly, over five years.

This transition formula covered people born roughly from 1917 to 1921 the group now known as the notch. It gave many of them higher benefits than they otherwise would have had, but lower than the lucky group that got the windfall.

Hence, the notch-baby grievance arose. The retirees in this group didn't care (or didn't know) that that small group of previous retirees merely had benefited from a mistake. They wanted the same windfall benefits, too.

Since 1977, fund-raisers have fed on the notch. The major notch mailer today is The Retired Enlisted Association (TREA) Senior Citizens League in Washington, D.C. TREA raised $7.47 million in 1997, up from $6.3 million in 1996. Last year's data hasn't been published yet.

The notch is a nifty fund-raiser for legislators, too. By introducing or co-sponsoring a bill, they can pick up a campaign contribution from TREA. The current bills push for a flat $5,000 "settlement" for everyone in the notch. No cost estimates are offered, but based on Social Security data, the price could be anywhere from $25 billion to $60 billion.

It would be a lot to pay for an injustice that was never done.

Syndicated columnist Jane Bryant Quinn can be reached in care of the Washington Post Writers Group, 1150 15th St., Washington D.C. 20071-9200.

For reprint and licensing requests for this article, CLICK HERE.