Additional requirements for claiming the Hope credit.(p20)
The new American opportunity credit ( chapter 2
) has replaced the Hope credit for most taxpayers. However, a larger Hope credit ($3,600 maximum) is available for students meeting the special rules for the Midwestern disaster areas. In order to claim the Hope credit for 2009, you must:
- Claim the Hope credit for at least one student attending an eligible institution in a Midwestern disaster area, and
- Choose not to claim the American opportunity credit for any student in 2009.
Income limits increased.(p20)
The amount of your Hope credit for 2009 is gradually reduced (phased out) if your modified adjusted gross income (MAGI) is between $50,000 and $60,000 ($100,000 and $120,000 if you file a joint return). You cannot claim a credit if your MAGI is $60,000 or more ($120,000 or more if you file a joint return). This is an increase from the 2008 limits of $48,000 and $58,000 ($96,000 and $116,000 if filing a joint return). See Effect of the Amount of Your Income on the Amount of Your Credit
, later, for more information.
For 2009, there are three tax credits available to help you offset the costs of higher education by reducing the amount of your income tax. They are the American opportunity credit, the Hope credit, and the lifetime learning credit. This chapter discusses the Hope credit. The American opportunity credit is discussed in chapter 2
. The lifetime learning credit is discussed in chapter 4
This chapter explains:
- Who can claim the Hope credit,
- What expenses qualify for the credit,
- Who is an eligible student,
- Who can claim a dependent's expenses,
- How to figure the credit,
- How to claim the credit, and
- When the credit must be repaid.
For the tax year, you may be able to claim a Hope credit of up to $1,800 ($3,600 if a student in a Midwestern disaster area) for qualified education expenses paid for each eligible student.
A tax credit reduces the amount of income tax you may have to pay. Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself. The Hope credit is a nonrefundable credit. This means that it can reduce your tax to zero, but if the credit is more than your tax the excess will not be refunded to you.
Your allowable Hope credit may be limited by the amount of your income and the amount of your tax. taxmap/pubs/p970-011.htm#en_us_publink1000239204
To qualify for the special rules, a student must attend an eligible educational institution in a Midwestern disaster area. See Table 4-2
at the end of chapter 4 for a list of qualifying disaster areas. For the expanded definition of qualified education expenses, see Students in Midwestern disaster areas
under Qualified Education Expenses
, later in this chapter.
You can choose the education benefit that will give you the lowest tax. You may want to compare the tuition and fees deduction ( chapter 7
) to one or more of the education credits.
See Table 3-1
, below, for the basics of the Hope credit. The details are discussed in this chapter.
Table 3-1. Overview of the Hope Credit
| Maximum credit ||Up to $1,800 ($3,600 if a student in a Midwestern disaster area) credit per eligible student |
| Additional requirement for 2009 ||At least one eligible student must be attending an eligible educational institution in a Midwestern disaster area|
| Limit on modified adjusted gross income (MAGI) ||$120,000 if married filling jointly; |
$60,000 if single, head of household, or qualifying widow(er)
| Refundable or nonrefundable ||Nonrefundable—credit limited to the amount of tax you must pay on your taxable income|
| Number of years of postsecondary education ||Available ONLY for the first 2 years of postsecondary education|
| Number of tax years credit available ||Available ONLY for 2 tax years per eligible student|
| Type of degree required ||Student must be pursuing an undergraduate degree or other recognized education credential|
| Number of courses ||Student must be enrolled at least half time for at least one academic period that begins during the tax year|
| Felony drug conviction ||No felony drug convictions on student's records|
| Qualified expenses ||Tuition and fees required for enrollment (including amounts required to be paid to the institution for course-related books, supplies, and equipment). Additional expenses allowed for students in Midwestern disaster areas.|
| Payments for academic periods ||Payments made in 2009 for academic periods beginning in 2009 and in the first 3 months of 2010|
For each student, you can elect for any year only one of the credits. For example, if you elect to take the Hope credit for a child on your 2009 tax return, you cannot, for that same child, also claim the lifetime learning credit for 2009.
If you are eligible to claim the Hope credit and you are also eligible to claim the lifetime learning credit for the same student in the same year, you can choose to claim either credit, but not both.
If you pay qualified education expenses for more than one student in the same year, you can choose to take the Hope and lifetime learning credits on a per-student, per-year basis. This means that, for example, you can claim the Hope credit for one student and the lifetime learning credit for another student in the same year.
However, you cannot claim the Hope credit for one student and the American opportunity credit for another student in the same year. If you want to claim either of these credits for 2009, you must use the same credit (Hope or American opportunity) for all eligible students. And, in order to claim the Hope credit for any student, at least one of the students must qualify under the rules for the Midwestern disaster areas. None of the requirements in this paragraph will prevent any eligible student from claiming the lifetime learning credit.taxmap/pubs/p970-011.htm#en_us_publink1000178048
There are several differences between these three credits. For example, you can claim the Hope credit based on the same student's expenses for no more than 2 tax years. The American opportunity credit can be claimed for the same student for no more than 4 tax years, but any year in which the Hope credit was claimed counts towards the 4 years. There is no limit on the number of years for which you can claim a lifetime learning credit based on the same student's expenses. The differences between the three credits are shown in Appendix B
near the end of this publication.
The following rules will help you determine if you are eligible to claim the Hope credit on your tax return.taxmap/pubs/p970-011.htm#en_us_publink1000178052
Generally, you can claim the Hope credit if all four of the following requirements are met.
- You pay qualified education expenses of higher education.
- You pay the education 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 have at least one student attending an eligible educational institution in a Midwestern disaster area and choose not to claim the American opportunity credit for any student in 2009.
Qualified education expenses paid by a dependent for whom you claim an exemption, or by a third party for that dependent, are considered paid by you.