Publication 970 |
2000 Tax Year |
What Expenses Qualify?
The Hope credit is based on qualified tuition and related expenses
you pay for yourself, your spouse, or a dependent for whom you claim
an exemption on your tax return. Generally, the credit is allowed for
qualified tuition and related expenses paid in 2000 for an
academic period (defined earlier) beginning in 2000 (but
see Prepaid expenses, later).
Qualified tuition and related expenses.
In general, qualified tuition and related expenses are tuition and
fees required for enrollment or attendance at an eligible
educational institution.
Student-activity fees and fees for course-related books, supplies,
and equipment are included in qualified tuition and related expenses
only if the fees must be paid to the institution
as a condition of enrollment or attendance.
Eligible educational institution.
An eligible educational institution is any college, university,
vocational school, or other postsecondary educational institution
eligible to participate in a student aid program administered by the
Department of Education. It includes virtually all accredited, public,
nonprofit, and proprietary (privately owned profit-making)
postsecondary institutions. The educational institution should be able
to tell you if it is an eligible educational institution.
Prepaid expenses.
If you paid qualified tuition and related expenses in 2000 for an
academic period that begins in the first three months of 2001, you can
use the prepaid amount in figuring your 2000 Hope credit.
For example, if you paid $1,500 in December 2000 for qualified
tuition for the winter 2001 semester beginning in January 2001, you
can use that $1,500 in figuring your 2000 credit.
Payments with borrowed funds.
You can claim a Hope credit for qualified tuition and related
expenses paid with the proceeds of a loan. You use the expenses to
figure the Hope credit for the year in which the expenses are paid,
not the year in which the loan is repaid.
Adjustments To Qualified Expenses
If you pay higher education expenses with certain tax-free
funds, you cannot claim a credit for those amounts. You must
reduce the qualified expenses by the amount of any tax-free
educational assistance you received. Tax-free educational assistance
could include:
- Scholarships,
- Pell grants,
- Employer-provided educational assistance,
- Veterans' educational assistance, and
- Any other nontaxable payments (other than gifts, bequests,
or inheritances) received for educational expenses.
Do not reduce the qualified expenses by amounts paid with the
student's:
- Earnings,
- Loans,
- Gifts,
- Inheritances, and
- Personal savings.
Also, do not reduce the qualified expenses by any scholarship
reported as income on the student's return or any scholarship which,
by its terms, cannot be applied to qualified tuition and related
expenses.
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