Frequently Asked Tax Questions
Child Care Credit/Other Credits - Hope & Life Time Learning
Educational Credits
Rev. date: 1/1/2011The 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: 1/10/2011Expenses 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 (unless required for enrollment or attendance),
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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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Also, 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 whether or not paid to the education
institution.
Rev. date: 11/16/2010No. 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: 1/1/2010No, a married individual filing a separate return can not claim
an education credit.
Rev. date: 1/1/2011No, you can not claim a credit for the amount of higher education
expenses paid by a tax-free scholarship.
Rev. date: 1/1/2010Yes, 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: 2/15/2011Higher 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: 1/1/2011Generally, 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: 1/1/2011The 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: 1/1/2011Generally, 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: 1/1/2010The 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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