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Education Tax Credits

There are two education tax credits available, the Hope Credit and the Lifetime Learning Credit. The credits are based on education expenses paid for you, your spouse, or your dependents. During any particular year, you can claim only one of the credits for each student.

The amount of the credit is determined by the amount you pay for "qualified tuition and related expenses" for each student and the amount of your modified adjusted gross income (modified AGI).

Expenses that qualify are tuition and fees required for enrollment or attendance at an accredited college, university, vocational school, or other post-secondary educational institution that is eligible to participate in a student aid program administered by the Department of Education.

Qualified expenses do not include room and board, insurance, transportation, or other similar personal, living, or family expenses. Qualified expenses may include fees for books, supplies, and equipment only if the fees must be paid to the school for the student's enrollment or attendance. In addition, qualified expenses may include student activity fees if the fee must be paid to the school for the student's enrollment or attendance.

You can claim a Hope Credit only for an "eligible student." An "eligible student" is a student who:

  1. As of the beginning of the year, has not completed the first two years of post-secondary education (that is, generally is a freshman or sophomore in college).
  2. Is enrolled in a program that leads to a degree, certificate, or other recognized educational credential, for at least one academic period beginning during the year.
  3. Is taking at least one-half of the normal full-time workload for the student's course of study for at least one academic period beginning during the calendar year, and
  4. Is free of any federal or state felony conviction for possessing or distributing a controlled substance as of the end of the year.

You can claim a Hope Credit for only two tax years for each eligible student. An eligible student can be you, your spouse, or your dependent for whom you claim an exemption.

The Lifetime Learning Credit is not based on the student's workload. It is allowed for one or more courses that the student takes at an eligible educational institution. The credit is not limited to students in the first two years of post-secondary education. Expenses for graduate-level degree work are eligible. However, to be eligible for the credit, the student must be taking course work in order to acquire or improve job skills. There is no limit on the number of tax years for which the Lifetime Learning credit can be claimed for each student. The amount you can claim as a credit does not vary (i.e., increase) based on the number of students for whom you pay qualified expenses.

Both the Hope Credit and Lifetime Learning Credit may be reduced, or eliminated, if your modified adjusted gross income exceeds certain limits, based on your filing status. You cannot claim either credit if you are married filing a separate return. The credit is claimed on Form 8863 (PDF).

For additional information on education credits, refer to Publication 970, Tax Benefits for Education.

Child Care Credit/Other Credits

Hope & Life Time Learning Educational Credits

  1. 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 (MAGI).
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.
  8. 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 institution.

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.
  1. 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 taking a percentage of the qualified educational expenses paid. This information is found in Publication 970, Chapter 3.
  2. 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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