Frequently Asked Tax Questions
Child Care Credit/Other Credits - Hope & Life Time Learning Educational Credits
Rev. date: 1/2010The amount of an education credit is determined by using Form 8863, Education Credits (American Opportunity, Hope, and Lifetime Learning Credits).
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The form takes into account the amount of qualified tuition and related expenses you paid for each eligible student, and
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The amount of your Modified Adjusted Gross Income (MAGI).
Rev. date: 1/2010Expenses that qualify for an education credit are qualified tuition and related expenses required for enrollment or attendance at an eligible educational institution.
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An eligible educational institution includes most accredited colleges, universities, vocational schools, or other postsecondary educational institutions eligible to participate in the student aid programs administered by the Department of Education.
Qualified expenses do not include expenses for:
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Student activity fees,
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Athletics (unless the course is part of the student's degree program),
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Room and board,
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Insurance,
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Transportation or similar personal, living, or family expenses.
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The cost of books and equipment are generally not qualified expenses because eligible educational institutions usually do not require that the cost of the books or equipment be paid to the institution as a condition of the student's enrollment or attendance at the institution; however, for taxable years 2009 and 2010, the American Opportunity Tax Credit modifies the Hope Credit to include course material.
Rev. date: 1/2010No. Expenses paid to attend a private high school do not qualify for the education credits because a high school is not an eligible educational institution.
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In general, an eligible educational institution is an accredited college, university, vocational school, or other postsecondary educational institution, including an accredited, public, nonprofit, or proprietary (private-owned, profit-making) postsecondary institution.
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Additionally, in order to be an eligible educational institution, the school must be eligible to participate in a student aid program administered by the Department of Education.
Rev. date: 1/2010No, a married individual filing a separate return can not claim an education credit.
Rev. date: 1/2010No, you can not claim a credit for the amount of higher education expenses paid by a tax-free scholarship.
Rev. date: 1/2010Yes, fill out
Form 8863 (PDF),
Education Credits (American Opportunity, Hope and Lifetime Learning Credits). -
You must reduce the total qualified expenses by the amount of any tax-free educational assistance.
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Do not reduce the qualified expenses by amounts paid with the student's earnings, loans, gifts, inheritances, or personal savings.
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Also, do not reduce the qualified expenses by any scholarship reported as income on the student's return or any scholarship that, by its terms, can not be applied to qualified tuition and related expenses.
Rev. date: 1/2010Higher education expenses paid by the proceeds of a government-subsidized loan may qualify for the credit if you must repay 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.
Rev. date: 1/2010Generally, you can claim the Hope Credit if all three of the following requirements are met:
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You pay qualified tuition and related expenses for the first 2 years of postsecondary education.
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You pay the tuition and related expenses for an eligible student.
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The eligible student is you, 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 applies:
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Your filing status is married filing separately.
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You are listed as a dependent in the Exemptions section of another person's tax return (such as your parents').
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Your modified adjusted gross income can not be above a certain dollar limitation.
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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. (For additional information, refer to
Publication 519, U.S. Tax Guide for Aliens).
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You claim the Lifetime Learning Credit for the same student in the same year.
In general, the Hope Credit is based on tuition and related expenses required for enrollment or attendance at an eligible educational institution.
For a taxpayer to claim the Hope Credit, the student for whom you pay tuition and related expenses must be an eligible student. To be an eligible student, generally, the student must:
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Not have had expenses that were used to figure a Hope Credit in any 2 earlier tax years.
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Not have completed the first 2 years of postsecondary education (generally, the freshman and sophomore years of college) before this tax year.
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Must have been 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.
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Must have been free of any federal or state felony conviction for possessing or distributing a controlled substance as of the end of the tax year.
For tax years 2009 and 2010, the American Opportunity Tax Credit modifies the Hope Credit as follows:
- The maximum amount of the credit is increased to $2,500.00.
- The credit can now be claimed for the first 4 years, not 2, of postsecondary education.
- The modified adjusted gross income limitations are increased.
- Qualified expenses include course materials.
- Generally, 40% of the Hope Credit is now refundable (up to $1,000).
However, for a student who attended an educational institution located in a Midwest disaster area, you can choose instead to claim the credit under the previous rules, but then you must use the previous rules for all students for whom you claim the credit.
Rev. date: 1/2010The Lifetime Learning Credit is a nonrefundable tax credit with a dollar limit per family that is available for qualified tuition and related expenses of higher education, whether the student is at the undergraduate or graduate level.
Rev. date: 1/2010Generally, you can claim the Lifetime Learning Credit if all three of the following requirements are met:
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You pay qualified tuition and related expenses of higher education.
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You pay these the tuition and related expenses for an eligible student.
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The eligible student is you, your spouse, or a dependent for whom 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 whom you claim an exemption on your tax return.
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As with the Hope Credit, generally, the Lifetime Learning 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 to acquire or improve job skills.
You cannot claim the Lifetime Learning Credit if any of the following apply:
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Your filing status is married filing separately.
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You are listed as a dependent in the Exemptions section on another person's tax return (such as your parents').
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Your modified adjusted gross income is above a specified amount.
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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. (For additional information, refer to
Publication 519 U.S. Tax Guide for Aliens); or
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You claim another education credit for the same student in same year.
Rev. date: 1/2010The cost of college classes taken while a student is attending high school may qualify for an education tax credit if the requirements for the credit are met.
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