Keyword: Hope Credit
This is archived information that pertains only to the 2003 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.
7.4 Child Care Credit/Other Credits: Hope & Life Time Learning Educational Credits
How does the Lifetime Learning Credit different from the Hope Credit?
Unlike the Hope Credit:
The Lifetime Learning Credit is not based on the student's workload. It
is allowed for one or more courses.
The credit is not limited to students in the first 2 years of postsecondary
education.
Expenses for graduate level degree work are eligible.
There is no maximum period for which the credit can be claimed for each
eligible student.
The amount you can claim as a credit does not vary (increase) based on
the number of eligible students for whom you pay qualified expenses.
References:
I finished my college sophomore year in June and began my junior
year in September. Can I take both the Hope and Lifetime Learning Credit in
that year?
No, you cannot take both credits in one year for the same student. However,
eligibility for the Hope Credit depends on your status at the beginning of
the calendar year. If you are classified as a second-semester sophomore during
the spring semester and as a first-semester junior during the fall semester
of that same year, the qualified expenses you pay for the fall semester may
be taken into account for the Hope Credit because you had not completed the
first 2 years of your secondary education when the year began.
References:
- Publication 970, Tax Benefits for Higher Education
- Tax Topic 605, Education credits
- Ref (p. 35 of 8/28/01 S 25A draft final regs (ex 3); 25A
(b) (2) (c) )
How is the amount of the Hope or Lifetime Learning Credit determined?
The amount of the credit is determined by the amount you pay for qualified
tuition and related expenses paid for each eligible student and the amount
of your modified adjusted gross income (AGI).
References:
If I put money aside in a college savings plan for my two children,
is that money eligible for either the Hope or Lifetime Learning Credit?
No, an education credit is claimed in the year in which the expenses are
paid, not in the year in which money is set aside in a college savings plan.
You may want to consider setting up an Educational IRA. For more information,
refer to Publication 970, Tax Benefits for Higher Education.
References:
Do I need to receive a Form 1098-T, Tuition Payments Statement,
from my children's colleges before I can file for the Hope Scholarship Credit
and the Lifetime Learning Tax Credit?
No, there is no requirement that you receive this form before you can claim
these credits.
References:
If tuition was paid by a government subsidized loan, can I still
take the Hope or Lifetime Learning Credit?
If you take out a loan to pay higher education expenses, those expenses
may quality for the credit if you will be required to pay back the loan. The
credit is claimed in the year in which the expenses are paid, not in the year
in which the loan is repaid.
References:
If education expenses were paid by a school loan that the student
has not began paying back, do the expenses still qualify for the Hope or Lifetime
Learning Credits?
The rule for a school loan is the same as the rule for a government subsidized
loan. Even though the loan proceeds are not income to you, expenses paid from
the loan proceeds may qualify for the Hope or Lifetime Learning Credit if
the loan must be repaid. The education credit is claimed in the year in which
the expenses are paid, not in the year in which the loan is repaid.
References:
I filed my tax return via TeleFile and then I received a form from
my school stating that I was eligible for the Hope Scholarship and Lifetime
Learning Credits. What do I do now?
To claim the credit, you will need to file Form 1040X (PDF), Amended U.S. Individual Income Tax Return, and attach Form 8863 (PDF), Education Credits (Hope and Lifetime
Learning Credits).
References:
A divorced father pays college tuition directly to the college for
his child who is claimed as a dependent on his ex-wife's return. Is the divorced
father eligible for either of the educational credits - Hope or Lifetime Learning?
No. The divorced father cannot claim an educational credit because he does
not claim the child as a dependent. The ex-wife, however, can claim an educational
credit because she is claiming the child as a dependent and, under a special
rule, is treated as having paid the child's tuition. The child cannot claim
the credit because he is being claimed as a dependent on his mother's return.
References:
What is a Hope Credit?
It is a nonrefundable tax credit for a student's first 2 years of undergraduate
education.
References:
Who can claim the Hope Credit?
Generally, you can claim the Hope credit if all three of
the following requirements are met.
You pay qualified tuition and related expenses of
higher education.
You pay the tuition and related expenses for an eligible
student.
The eligible student is either yourself, your spouse, or a dependent
for whom you claim an exemption on your tax return.
You cannot claim the Hope credit if any of the following apply.
Your filing status is married separately.
You are listed as a dependent in the Exemptions section
on another person's tax return (such as your parents'). See Who
Can Claim a Dependent's Expenses , later.
Your modified adjusted gross income is $51,000 or more ($103,000 or more
in the case of a joint return). Modified adjusted gross income is explained
later under Does the Amount of Your Income Affect the Amount
of Your Credit.
You (or your spouse) were a nonresident alien for any part of 2002 and
the nonresident alien did not elect to be treated as a resident alien for
tax purposes. More information on nonresident alien can be found in Publication 519 , U.S. Tax Guide for Aliens.
You claim the lifetime learning credit for the same student in 2002.
In general, qualified tuition and related expenses are tuition and fees
required for enrollment or attendance at an eligible educational
instititution
Eligible education institution . An eligible educational
institution is an 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.
To claim the Hope credit, the student for whom you pay qualified tuition
and related expenses must be an eligible student. This
is a student who meets all of the following requirements.
Did not have expenses that were used to figure a Hope credit in any 2
earlier tax years.
Had not completed the first 2 years of postsecondary education (generally,
the freshman and sophomore years of college) before 2002.
Was enrolled at least half-time in a program that leads to a degree, certificate,
or other recognized educational credential for a least one academic period
beginning in 2002.
Was free of any federal or state felony conviction for possessing or
distributing a controlled substance as of the end of 2002.
References:
What is the amount of the Hope Credit?
The maximum credit per student is $1,500 (100 percent of the first $1,000
of qualified tuition and related expenses, plus 50 percent of the next $1,000
of such expenses).
References:
I understand for the Hope Credit I must be in my first 2 years of
college. Does that mean I can take the credit if I am ranked as a freshman
or a sophomore even if I have been attending college for more than 2 years?
The Hope Credit may be claimed for no more than 2 taxable years and may
not be claimed if at the beginning of the taxable year the student has completed
the first 2 years of postsecondary education at an eligible educational institution.
If the student has not claimed a Hope Credit for more than 1 year and if the
educational institution at which the student is enrolled ranks the student
as being less than a first-semester junior at the beginning of the year, the
student may be eligible to claim the Hope Credit.
References:
Is tuition paid to a foreign university eligible for the Hope Credit?
Relatively few postsecondary institutions located outside of the United
States participate in a student aid program administered by the Department
of Education. Therefore, tuition paid to a foreign university usually does
not qualify for either of the education credits. The educational institution
should be able to tell you if it is an eligible educational institution.
References:
I will be able to claim the Hope Credit. What records do I need
to claim this credit?
You should keep all your canceled checks that were used to pay for the
qualifying expenses and any other documentation showing the amount of tuition
and fees paid.
References:
I am currently attending school for a second bachelor's degree.
I completed my original degree several years ago. Am I eligible for the Hope
Credit because I am just entering my second year of this bachelor's degree
program?
No. Since you have already completed your first 2 years of postsecondary
education, the courses that you are now taking do not qualify for the Hope
Credit. However, you may be eligible for the Lifetime Learning Credit.
References:
I have returned to college after several years. I attend a community
college and have not received an associate's degree as of yet. Can I claim
the Hope Credit for tuition I paid this year?
You can only claim the Hope Credit if at the beginning of the year, you
are not classified as having completed the first 2 years of postsecondary
education.
For example, if you attended classes for only one or two semesters, you
would still be in your first 2 years of post secondary school. Generally if
you attended five or more semesters, you would not be considered in your first
2 years of post secondary school even if you have not attained your associate's
degree.
If you don't qualify for the Hope Credit, you may qualify for the Lifetime
Learning Credit.
References:
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