What are the education credits?
There are two credits available, the Hope Scholarship Credit and the Lifetime Learning Credit.
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How is the Lifetime Learning Credit different from the Hope Credit?
Unlike the Hope Credit:
- The Lifetime Learning Credit is not based on the student's workload. It is allowed for one or more courses.
- The credit is not limited to students in the first two years of postsecondary education.
- Expenses for graduate level degree work are eligible.
- There is no maximum period for which the credit can be claimed for each eligible student.
- The amount you can claim as a credit does not vary (increase) based on the number of eligible students for whom you pay qualified expenses.
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How many education credits can I claim?
You can claim only one of the credits for each eligible student per tax year.
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I finished my college sophomore year in June and began my junior year in September. Can I take both the Hope and Lifetime Learning Credit?
No, you cannot take both credits in one year for the same student.
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How is the amount of the Hope or Lifetime Learning Credit determined?
The amount of the credit is determined by the amount you pay for qualified tuition and related expenses paid for each eligible student and the amount of your modified adjusted gross income (AGI).
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What expenses qualify for the education credits?
Expenses that qualify are tuition and fees required for enrollment or attendance at any college, vocational school, or other postsecondary educational institution eligible to participate in the student aid programs administered by the Department of Education.
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.
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Are expenses to attend private high schools eligible for the education credits or is it only for expenses to attend colleges?
An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the Department of Education. It includes virtually all accredited, public, nonprofit, and proprietary (privately owned profit making) postsecondary institutions.
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Many high school seniors are also enrolled in colleges for dual credits. Are the fees paid to the college eligible for one of the education tax credits?
College courses taken while attending high school may qualify for the Hope Scholarship Credit or for the Lifetime Learning Credit if the student meets the qualifications for claiming either of the credits.
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How do I know if my school is eligible to participate in the education credits?
The educational institution should be able to tell you if it is an eligible educational institution.
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Do I have to be enrolled in college to get an education credit?
Yes. College courses taken while attending high school may qualify for the Hope Scholarship Credit or for the Lifetime Learning Credit if the student meets the qualifications for claiming either of the credits.
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If I put money aside in a college savings plan for my two children, is that money eligible for either the Hope or Lifetime Learning Credit?
No, an education credit is claimed in the year in which the expenses are paid, not in the year in which money is set aside in a college savings plan. You may want to consider setting up an Educational IRA.
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Can I claim an education credit if I filed separately but I am married?
Neither the Hope credit nor the Lifetime Learning Credit can be claimed if the individual is married but filing a separate return.
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How do I claim the education credits?
The education credits are claimed on Form 8863, Education Credits (Hope and Lifetime Learning Credits), which is attached to your Form 1040 or Form 1040A.
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Can scholarships used as payment for college tuition and fees be claimed on Form 8863, Education Credits?
No. If you pay higher education expenses with certain tax-free funds, you cannot claim a credit for those amounts.
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I cannot use Form 8863 because I received a scholarship, what can I do?
You must reduce the qualified expenses by the amount of any tax-free educational assistance. Do not reduce the qualified expenses by amounts paid with the student's earnings, loans, gifts, inheritances, and personal savings. Also, do not reduce the qualified expenses by any scholarship reported as income on the student's return or any scholarship which, by its terms, cannot be applied to qualified tuition and related expenses.
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How can I get a Form 8863?
You can download this form and the instructions from the Forms & Pubs section of our web site.
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Why did I get Form 1098-T?
The information on Form 1098-T will help you determine whether you can claim an education tax credit.
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Who issues the Form 1098-T?
An eligible educational institution that receives payment of qualified tuition and related expenses generally must issue Form 1098-T, Tuition Payments Statement, to each student by February 1.
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What information is on Form 1098-T?
The following information should be included on the form.
- The name, address, and taxpayer identification number of the educational institution.
- The name, address, and taxpayer identification number of the student.
- Whether the student was enrolled for at least half of the full-time academic workload.
- Whether the student was enrolled exclusively in a graduate-level program
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I am currently going to school at the moment and I received a Form 1098-T. What is this form, and where and how can I claim this or deduct this?
An eligible educational institution (such as a college or university) that receives payment of qualified tuition and related expenses generally must issue Form 1098-T, Tuition Payments Statement, to each student by February 1.
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Do I need to receive a Form 1098-T, Tuition Payments Statement, from my children's colleges before I can file for the Hope Scholarship Credit and the Lifetime Learning Tax Credit?
There is no requirement that you receive this form before you can claim these credits.
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If tuition was paid by a government subsidized loan, can I still take the Hope or Lifetime Learning Credit?
If you pay higher education expenses with certain tax-free funds, such as a scholarship, you cannot claim a credit for those amounts. If you are required to pay the loan back that was used to pay the higher education expenses, then the expenditures would qualify. The credit is claimed in the year in which the expenses are paid, not in the year in which the loan is repaid.
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If education expenses were paid by a school loan, but the student has not began paying the loan, do the expenses still qualify for the Hope or Lifetime Learning Credits?
The education credit is claimed in the year in which the expenses are paid, not in the year in which the loan is repaid.
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I filed my tax return via TeleFile and then I received a form from my school stating that I was eligible for the Hope Scholarship and Lifetime Learning Credits. What do I do now?
You will need to file Form 1040X, Amended U.S. Individual Income Tax Return, and attach Form 8863, Education Credits (Hope and Lifetime Learning Credits).
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Can I use a 1040EZ if I am going to claim education credits?
No, you must use either Form 1040A or Form 1040 along with Form 8863, Education Credits (Hope and Lifetime Learning Credits), to claim the credit.
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Do I have to claim my child as a dependent to take any of the education credits?
Yes, you do have to claim your child as a dependent to take either of the education credits. If you claim an exemption for your child on your tax return, only you can claim the credit.
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A divorced parent pays college tuition for his child who is claimed as a dependent on the ex-wife's return. Is the divorced parent eligible for any of the educational credits - Hope or Lifetime Learning?
No. In order to claim the hope or lifetime learning credit for your child you must claim the child as an exemption. Your ex-wife cannot claim the credit as neither she nor the child paid the expense. The child cannot claim the credit as he is being claimed as a dependent on his mother's return.
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