Child Care Credit, Other Credits:
Hope & Life Time Learning Educational Credits
This is archived information that pertains only to the 2005 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.
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).
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 post-secondary 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.
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 post-secondary 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) post-secondary institutions.
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.
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.
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.
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 qualify 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.
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 can not be above a certain dollar
amount. This information is in Publication 970, Chapter 2.
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 the tax
year 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 the same
year. This information is found in Publication 970, Chapter
2.
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 post-secondary
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 this tax year.
- Was enrolled at least half-time in a program that leads to a degree, certificate,
or other recognized educational credential for at least one academic period
beginning in the tax year.
- Was free of any federal or state felony conviction for possessing or
distributing a controlled substance as of the end of the tax year.
What is a Lifetime Learning Credit?
A nonrefundable tax credit up to a certain dollar amount per family for
all undergraduate and graduate level education. The Lifetime Learning Credit
is calculated by talking a percentage of the qualified educational expenses
paid. This information is found in Publication 970, Chapter
3.
Who is eligible for the Lifetime Learning Credit?
Generally, you can claim the Lifetime Learning 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 who you claim an exemption on your tax return.
The Lifetime Learning Credit is based on qualified tuition and related
expenses you pay for yourself, your spouse, or a dependent for who you can
claim an exemption on your tax return. Generally, the credit is allowed for
qualified tuition and related expenses paid in the tax year for an academic
period beginning in that year or in the first 3 months of the following
year.
For purposes of the Lifetime Learning Credit, an eligible student is a
student who is enrolled in one or more courses at an eligible
educational institution.
An eligible educational institution is an college, university, vocational
school, or other post-secondary 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) post-secondary institutions. The educational institution should
be able to tell you if it is an eligible educational institution.
You cannot claim the Lifetime Learning Credit if any of
the following apply.
- Your filing status is married filing separately.
- You are listed as a dependent in the Exemptions section
on another person's tax return (such as your parent's). See Who
Can Claim a Dependent's Expenses, later.
- Your modified adjusted gross income is above a specified amount. 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 the tax
year and the nonresident alien did not elect to be treated as a resident for
tax purposes. More information on resident aliens can be found in Publication
519, U.S. Tax Guide for Aliens.
- You claim the Hope credit for the same student in same year.
Can the Lifetime Learning Credit be used for a high school student
taking classes at an approved college prior to graduation from high school?
College courses taken while attending high school may qualify for the Hope
Scholarship Credit or for the Lifetime Learning Credit if the student meets
the qualifications for claiming either of the credits.
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