The amount of the Hope credit (per eligible student) is the sum of:
- 100% of the first $1,200 ($2,400 if a student in a Midwestern disaster area) of qualified education expenses you paid for the eligible student, and
- 50% of the next $1,200 ($2,400 if a student in a Midwestern disaster area) of qualified education expenses you paid for that student.
The maximum amount of Hope credit you can claim in 2009 is $1,800 ($3,600 if a student in a Midwestern disaster area) times the number of eligible students. You can claim the full $1,800 ($3,600) for each eligible student for whom you paid at least $2,400 ($4,800) of qualified education expenses. However, the credit may be reduced based on your MAGI. See Effect of the Amount of Your Income on the Amount of Your Credit
on the next page.
Jon and Karen Frost are married and file a joint tax return. For 2009, they claim an exemption for their dependent daughter on their tax return. Their MAGI is $70,000. Their daughter is in her sophomore (second) year of studies at the local university, which is in a Midwestern disaster area. Jon and Karen paid qualified education expenses of $4,300 in 2009.
Jon and Karen, their daughter, and the local university meet all of the requirements for the Hope credit. Jon and Karen can claim a $3,350 Hope credit in 2009. This is 100% of the first $2,400 of qualified education expenses, plus 50% of the remaining $1,900.taxmap/pubs/p970-015.htm#en_us_publink1000178120
To help you figure your Hope credit, you should receive Form 1098-T
. Generally, an eligible educational institution (such as a college or university) must send Form 1098-T (or acceptable substitute) to each enrolled student by February 1, 2010. An institution may choose to report either payments received (box 1), or amounts billed (box 2), for qualified education expenses. However, the amounts in boxes 1 and 2 of Form 1098-T might be different from what you actually paid. When figuring the credit, use only the amounts you paid or were deemed to have paid in 2009 for qualified education expenses.
In addition, your Form 1098-T should give you other information for that institution, such as adjustments made for prior years, the amount of scholarships or grants, reimbursements or refunds, and whether you were enrolled at least half-time or were a graduate student.
The eligible educational institution may ask for a completed Form W-9S, Request for Student's or Borrower's Taxpayer Identification Number and Certification, or similar statement to obtain the student's name, address, and taxpayer identification number.taxmap/pubs/p970-015.htm#en_us_publink1000178121
The amount of your Hope credit is phased out (gradually reduced) if your MAGI is between $50,000 and $60,000 ($100,000 and $120,000 if you file a joint return). You cannot claim a Hope credit if your MAGI is $60,000 or more ($120,000 or more if you file a joint return). taxmap/pubs/p970-015.htm#en_us_publink1000178122
For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return.taxmap/pubs/p970-015.htm#en_us_publink1000178123
If you file Form 1040A, your MAGI is the AGI on line 22 of that form.taxmap/pubs/p970-015.htm#en_us_publink1000178124
If you file Form 1040, your MAGI is the AGI on line 38 of that form, modified by adding back any:
- Foreign earned income exclusion,
- Foreign housing exclusion,
- Foreign housing deduction,
- Exclusion of income by bona fide residents of American Samoa, and
- Exclusion of income by bona fide residents of Puerto Rico.
You can use Worksheet 3-1
, next, to figure your MAGI.
Worksheet 3-1. MAGI for the Hope Credit
|1.||Enter your adjusted gross income |
(Form 1040, line 38)
| ||1.|| |
|2.||Enter your foreign earned income exclusion and/or housing exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)|| ||2.|| || || |
|3.||Enter your foreign housing deduction (Form 2555, line 50)|| ||3.|| || || |
|4.||Enter the amount of income from Puerto Rico you are excluding|| ||4.|| || || |
|5.||Enter the amount of income from American Samoa you are excluding (Form 4563, line 15)|| ||5.|| || || |
|6.||Add the amounts on|
lines 2, 3, 4, and 5
| ||6.|| |
|7.||Add the amounts on lines 1 and 6. |
This is your modified adjusted
gross income. Enter this amount
on Form 8863, line 20
| ||7.|| |
If your MAGI is within the range of incomes where the credit must be reduced, you will figure your reduced credit using lines 17–29 of Form 8863. The same method is shown in the following example.taxmap/pubs/p970-015.htm#en_us_publink1000178128
You are filing a joint return and your MAGI is $101,000. In 2009, you paid $5,000 of qualified education expenses.
You figure a tentative Hope credit of $1,800 (100% of the first $1,200 of qualified education expenses, plus 50% of the next $1,200 of qualified education expenses).
Because your MAGI is within the range of incomes where the credit must be reduced, you must multiply your tentative credit ($1,800) by a fraction. The numerator of the fraction is $120,000 (the upper limit for those filing a joint return) minus your MAGI. The denominator is $20,000, the range of incomes for the phaseout ($100,000 to $120,000). The result is the amount of your phased out (reduced) Hope credit ($1,710).
| ||$1,800||×|| $120,000 − $101,000 |