Education Credit FAQs
For additional information regarding these tax credits, please visit the Internal Revenue Service (IRS) website.
Who is eligible to claim the Hope Scholarship Tax Credit?
An individual paying qualified tuition and expenses at a postsecondary educational institution may claim the credit, provided the student whose expenses are being paid and the institution meet certain eligibility requirements. In general, a student is eligible for the Hope Scholarship Tax Credit if the student is enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential for at least one academic period (e.g., semester, trimester, quarter) beginning during the calendar year, and is enrolled in one of the first two years of postsecondary education. Nonresident aliens generally are not eligible to claim the Hope Scholarship Tax Credit.
Who may claim the Lifetime Learning Tax Credit?
An individual paying qualified tuition and related expenses at a postsecondary educational institution may claim the credit, provided the institution is an eligible educational institution. Nonresident aliens generally are not eligible to claim the Lifetime Learning Tax Credit.
What does the term qualified tuition and related expenses mean for purposes of the Hope Scholarship Tax Credit and the Lifetime Learning Tax Credit?
Qualified tuition and related expenses are tuition and fees required for enrollment or attendance at an eligible educational institution. 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.
Are qualified tuition and related expenses for graduate-level education eligible for the Hope Scholarship Tax Credit, the Lifetime Learning Tax Credit or the American Opportunity Credit?
Hope Scholarship Tax Credit – No.
Lifetime Learning Tax Credit – Yes.
American Opportunity Tax Credit – No.
If a couple has two children, one is a freshman and the other is a junior, may the couple claim a Hope Scholarship Tax Credit for the freshman's expenses and a Lifetime Learning Tax Credit for the junior's expenses?
Yes, assuming the applicable eligibility requirements have been met for each credit, a taxpayer may claim the Hope Scholarship Tax Credit for one student's expenses and the Lifetime Learning Tax Credit for another student's expenses in the same year.
If a student (who is not claimed as a dependent on anyone's Federal Income Tax Return) pays qualified tuition and related expenses using a combination of a Federal Pell Grant, a loan, a gift from a family member, and some personal savings, what expenses may be taken into account in calculating the Hope Scholarship Tax Credit or the Lifetime Learning Tax Credit the student may claim?
Payments of qualified tuition and related expenses made with the student's earnings, a loan, a gift, an inheritance, or personal savings (including savings from a qualified state tuition program) are taken into account in calculating the credit amount. Payments made with a Federal Pell Grant or other tax-free scholarship, a tax-free distribution from an Education IRA, or tax-free employer provided educational assistance do not qualify as payments for purposes of the Hope Scholarship and Lifetime Learning Tax credits.
If a married taxpayer files a separate return, can the taxpayer claim the Hope Scholarship Tax Credit or Lifetime Learning Tax Credit on his/her income tax return?
No. Married taxpayers may claim the credit only if the taxpayer and the taxpayer's spouse file a joint return for the taxable year.
May a parent or student claim a credit for tuition paid in advance of when the academic period begins?
Generally, the credit is available only for payments of qualified tuition and related expenses that cover an academic period beginning in the same calendar year as payment is made. (An academic period begins on the first day of classes, and does not include periods of orientation, counseling, or vacation.) An exception allows a parent or student to claim a credit for payments of qualified tuition and related expenses made during the calendar year to cover an academic period that begins in January, February or March of the following taxable year.
Hope Scholarship Tax Credit: Because the Hope Scholarship Tax Credit does not apply to expenses paid before January 1, 2009, this exception does not apply to tuition paid in 2008 to cover academic periods beginning in 2009.