Keyword: Education Tax Credits
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.
3.2 Itemized Deductions/Standard Deductions: Education & Work-Related Expenses
I have a child attending a private Catholic grade school. Is any
or all of the tuition I pay deductible or a tax credit?
Other than a medical deduction for tuition in the case of a special school
for physical or mental disability, tuition for primary or secondary education
is neither deductible as an educational expense nor as a charitable contribution,
and there are no tax credits for the tuition. You cannot take a charitable
deduction for tuition, or for amounts you pay instead of tuition, even if
you pay them for children to attend parochial schools or qualifying nonprofit
day-care centers. You also cannot deduct any fixed amount you may be required
to pay in addition to the tuition fee to enroll in a private school, even
if it is designated as a "donation." For more information, refer to Publication 526 , Charitable Contributions.
Starting in 2002, you can use distribution from a Coverdell Education Savings
Account (formerly, Education IRA) for primary school tuition if other requirements
are met. For more information, refer to Publication 970, Tax Benefits
for Higher Education; and Tax Topic 310 Coverdell Education
Savings Accounts.
References:
7.4 Child Care Credit/Other Credits: Hope & Life Time Learning Educational Credits
What are the education credits?
There are two credits available, the Hope Scholarship Credit and the Lifetime
Learning Credit.
References:
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:
How many education credits can I claim?
You can claim only one of the credits for each eligible student per tax
year.
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:
What expenses qualify for the education credits?
Expenses that qualify are tuition and fees required for enrollment or attendance
at any college, vocational school, or other postsecondary educational institution
eligible to participate in the student aid programs administered by the Department
of Education.
Qualified expenses do not include books, room and board, student activities,
athletics (unless the course is part of the student's degree program), insurance,
equipment, transportation, or other similar personal, living, or family expenses.
The cost of books and equipment are generally not qualified expenses because
eligible educational institutions usually do not require that fees for such
books or equipment be paid to the institution as a condition of the student's
enrollment or attendance at the institution.
References:
Are expenses to attend private high schools eligible for the education
credits ?
No. Expenses paid to attend high school do not qualify for the education
credits because a high school is not an 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.
References:
Many high school seniors are also enrolled in colleges for dual
academic credits. Are the fees paid to the college eligible for one of the
education tax credits?
Expenses paid for college courses taken while attending high school may
qualify for the Hope Scholarship Credit or for the Lifetime Learning Credit
if the student otherwise meets the qualifications for claiming either of the
credits.
References:
How do I know if my school is eligible to participate in the education
credits?
The educational institution should be able to tell you if it is an eligible
educational institution.
References:
Do I have to be enrolled in college to get the Hope education credit?
Yes. One qualification to claim the Hope credit is that the student be
enrolled in an eligible educational institution (in a program) at least half
time that leads to a degree certificate or other recognized educational credential
for no less than one academic period beginning in the taxable year.
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:
Can I claim an education credit if I am married but file separately?
No. Neither the Hope Credit nor the Lifetime Learning Credit can be claimed
if the individual is married but filed a separate return.
References:
How do I claim the education credits?
The education credits are claimed on Form 8863 (PDF),
Education Credits (Hope and Lifetime Learning Credits), which is attached
to your Form 1040 or Form 1040A.
References:
If I pay college tuition and fees with a scholarship, can I claim
an education credit on Form 8863 for those payments?
No. You cannot claim a credit for the amount of higher education expenses
paid for by tax-free scholarships.
References:
If the amount of qualified tuition and fees I pay is greater than
the amount of my scholarship, should I fill out Form 8863? If I cannot use
Form 8863 because I received a scholarship, what can I do?
You must reduce the qualified expenses by the amount of any tax-free educational
assistance. 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.
References:
How can I get a Form 8863?
You can download this form and the instructions from the Forms
& Pubs section of our web site. You may also call 1-800-829-3676.
References:
Why did I get Form 1098-T?
The information on Form 1098-T may help you determine whether you can claim
an education tax credit.
References:
Who issues the Form 1098-T?
An eligible educational institution that receives payment of qualified
tuition and related expenses generally must issue Form 1098-T, Tuition Payments
Statement, to each student by January 31st.
References:
What information is on Form 1098-T?
The following information should be included on the form.
The name, address, and taxpayer identification number of the educational
institution.
The name, address, and taxpayer identification number of the student.
Whether the student was enrolled for at least half of the full-time academic
workload for at least one academic period.
Whether the student was enrolled exclusively in a graduate-level program
Amount of qualified tuition and fees either paid or billed by the institution
(depending on institution method of reporting).
Scholarship and fellowship grants for the year and adjustments to the
scholarship and fellowship grants for prior years.
Adjustment to tuition and fees for prior years.
Whether any payments made or reported in 2003 pertain to an academic period
beginning January through March 2004.
Total amount of reimbursements or refunds of qualified tuition and related
expenses made to student during 2003 (applicable only if issuer of 1098-T
is insurer).
References:
I am currently going to school and I received a Form 1098-T. What
is this form? How can I claim an education tax credit?
An eligible educational institution (such as a college or university) that
receives payment of qualified tuition and related expenses generally must
issue Form 1098-T, Tuition Payments Statement, to each student by January
31st. You may be able to claim a credit for these expenses by completing Form 8863 (PDF), Education Credits, and attaching
it to your Form 1040.
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:
Can I use a 1040EZ if I am going to claim education credits?
No, you must use either Form 1040A or Form 1040 along with Form 8863 (PDF), Education Credits (Hope and Lifetime Learning Credits),
to claim the credit.
References:
If I want to take an education credit for my child, do I also have
to claim my child as a dependent?
Yes, you must claim your child as a dependent to take either of the education
credits. If you claim an exemption for your child on your tax return, only
you can claim the credit.
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:
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