Can I claim the Child and Dependent Care Credit?
If you paid someone to care for your dependent under age 13 or your disabled dependent or spouse so that you could work or look for work, you may be able claim the credit for child and dependent care expenses. For specific information on how to qualify for this credit refer to Tax Topic 602, Child and Dependent Care Credit, or Publication 503, Child and Dependent Care Expenses.
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My divorce decree states that my ex-husband can claim our daughter as an exemption on alternate years. I am the custodial parent and pay child care expenses. Can I claim child care expenses on the years he takes the exemption?
The Child and Dependent Care Credit can only be claimed by the custodial parent. This is true even if you cannot claim the child's exemption. Refer to Publication 503, Child and Dependent Care Expenses, for a complete discussion.
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My babysitter refused to provide me with her social security number. Can I still claim what I paid for child care on my taxes while I worked? If so, how?
Yes, assuming that you already meet the other requirements to claim the child care credit, but are missing the required ID number of the provider, you can still claim the credit by demonstrating "due diligence" in attempting to secure the needed information.
When the care provider refuses to give the identifying information, the taxpayer can still claim the credit and is instructed to provide whatever information is available about the provider (such as name and address) on the form used to claim the credit (Form 2441, Child and Dependent Care Expenses, or Form 1040A, SCHEDULE 2, Child and Dependent Care Expenses for Form 1040A Filers). The taxpayer should write "see page 2" in the columns calling for the missing information. He/she would write at the bottom of page 2 that the provider refused to give the requested information. This statement will show that the taxpayer used due diligence in trying to secure and furnish the necessary information.
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As a child care center, are we required to give out tax statements to any of our parents who request one? Can we refuse to give a tax statement to someone who has a past due balance with us?
As a care provider, you are required to give your correct name, address, and Taxpayer Identification Number (TIN) to customers who paid for child care services during the year. A valid TIN can be the Employer Identification Number (EIN) of the business or the social security number of a sole proprietor. Form W-10, Dependent Care Provider's Identification and Certification, or a similar statement may be used for such purposes.
A care provider who does not give the customer a correct TIN is subject to a penalty of $50 for each failure unless the failure is due to reasonable cause and not willful neglect. The failure of a customer to full pay a bill would not normally constitute reasonable cause. The penalty does not apply to qualified tax exempt care providers.
When the care provider refuses to give the identifying information, the taxpayer can still claim the credit and is instructed to provide whatever information is available about the provider (such as name and address) on the form used to claim the credit (Form 2441, Child and Dependent Care Expenses, or Form 1040A, SCHEDULE 2, Child and Dependent Care Expenses for Form 1040A Filers). The taxpayer should write "see page 2" in the columns calling for the missing information. He/she would write at the bottom of page 2 that the provider refused to give the requested information. This statement will show that the taxpayer used due diligence in trying to secure and furnish the necessary information.
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I am thinking of having an au pair take care of my child. There is a $4,000 fee up front and I will be paying $150 a week to the au pair. What, if any, of this is deductible?
The up front fee is not deductible. The $150 per week as well as other work related expenses may qualify as a child and dependent care expense. Please refer to Publication 503, Child and Dependent Care Expenses for a full discussion.
If your au pair works in your home, you may also be responsible for employment taxes. Refer to Publication 926, Household Employers Tax Guide, for more information.
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If I send my child who was under the age of 13 to day camps instead of a child care facility for the summer, are these deductible expenses?
The cost of day camp may qualify as a child care expense. The cost of overnight camp would not.
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I am thinking of having a family member baby-sit for my child full time in their own home while I work. Are either of us responsible for taxes on the money I would pay? Can I deduct this money as my child care expense even though my family member is not a registered day care provider?
You may have deductible child care expenses if the family member is not your dependent and you meet all the tests to claim the Child and Dependent Care Credit. Your family member will be responsible for paying taxes on the money earned and will be considered to be self-employed.
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Can elderly day care payments be claimed as a deduction?
Elderly day care payments may qualify as Child and Dependent Care Expenses. In order to be a qualifying person, the person receiving the elderly day care must be either your spouse who was physically or mentally not able to care for himself or your dependent who was physically not able to care for himself and for whom you can claim an exemption (or could claim an exemption except the person had $2,800 or more of gross income in the year 2000). All of the other criteria for claiming the Child and Dependent Care Credit must also be met.
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My spouse and I both work and are eligible for the Child and Dependent Care Credit. May I include my 5 year old son's parochial school kindergarten tuition cost as a qualified expense in Form 2441, Child Care Expenses?
The expenses for kindergarten do not qualify for the dependent care credit because kindergarten is primarily educational in nature. However, you can count the part of the expenses of sending your child to school that is for your child's care if it can be separated from the expenses of education.
If your child is in the first grade or higher, or if the cost of schooling can be separated, you must divide the total cost between the cost of care and the cost of schooling. You can count only the cost of care in figuring your credit.
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I paid into a dependent care benefits plan and the amount is shown in Box 10 of the my Form W-2. However, the cost paid to the child care provider was more. Can the additional expense not paid into the dependent care benefits plan and not shown in Box 10 of the W-2 be claimed on Form 2441?
That depends on the amount you elected to have contributed to the flexible spending arrangement. The exclusion from income for employer-provided benefits can be as high as $5,000, while the credit for dependent care expenses is based on annual dollar limits of $2,400 for one person and $4,800 for two or more persons. You must reduce those dollar limits by the amount of excludible dependent care benefits. If you had expenses that you paid yourself and the employer provided benefits were less than the applicable dollar limit, you can also claim the credit. Complete Part III of either Form 2441, Child and Dependent Care Expenses, or Form 1040A, SCHEDULE 2, Child and Dependent Care Expenses for Form 1040A Filers, to determine the excluded benefits and whether you can claim the credit.
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If my employer did not put the amount I paid into a flexible spending account for dependent care in box 10 on my Form W-2, can I claim the Child Care and Dependent Tax Credit?
If the omission was simply a clerical oversight, you may not claim the child care tax credit. If the flexible spending account was an eligible plan under Internal Revenue Code Section 125, the amount of the salary reduction that was contributed to your account should appear in box 10 of your Form W-2. Request a corrected Form W-2 from your employer.
You may claim the child care tax credit if the contribution to your flexible spending account was less than your annual dollar limitation for eligible expenses ($2,400 for one person, or $4,800 for two or more persons). Even if you cannot claim the credit, you must complete Part III of either Form 2441, Child and Dependent Care Expenses, or Form 1040A, SCHEDULE 2, Child and Dependent Care Expenses for Form 1040A Filers, to exclude your employer provided benefits from your income. If the amount you paid into a flexible spending account reduced your wages in box 1 of Form W-2, it is considered an employer provided benefit.
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I was under the impression that a Dependent Care Benefit Plan would benefit me, not penalize me with an increase in taxes. How can my employer say they provided a benefit in the total amount of $3,000 in W-2, Block 10 when I had $3,000 in wages set aside for dependent care benefits?
The actual mechanism for this type of plan is an agreement to voluntarily reduce your salary in return for an employer-provided fringe benefit. These plans must be set up this way to avoid the constructive receipt of the forgone cash wages, which would make the benefit taxable to you. Therefore, the benefits are actually employer provided or funded.
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What is a Hope Credit?
It is a nonrefundable tax credit for a student's first 2 years of undergraduate education.
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Who can claim the Hope Credit?
You can claim a Hope Credit for an eligible student who is:
- Enrolled in one of the first two years of postsecondary education (generally freshman or sophomore years of college).
- Enrolled in a program that leads to a degree, certificate, or other recognized educational credential.
- Is taking at least one-half of the normal full-time workload for the course of study for at least one academic period beginning during the calendar year.
- Is free of any felony conviction for possessing or distributing a controlled substance (drugs).
An eligible student can be you, your spouse, or an eligible dependent
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What is the amount of the Hope Credit?
The maximum credit per student is $1,500 (100% of the first $1,000 of qualified tuition and related expenses, plus 50% of the next $1,000 of such expenses).
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I understand for the Hope Credit I must be in my first two years of college. Does that mean I can take the credit if I am ranked as a freshman or a sophomore even if I have been attending college for more than two years?
The Hope Credit is available for the first 2 tax years of your postsecondary education. If you have been attending college for more than 2 tax years, even though you are a freshman or sophomore, you do not qualify for the credit.
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Is tuition paid to a foreign university eligible for the Hope Credit?
Few, if any, postsecondary institutions located outside of the United States participate in a student aid program administered by the Department of Education. Therefore, tuition paid to a foreign university usually does not qualify for either of the education credits. The educational institution should be able to tell you if it is an eligible educational institution.
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I will be able to claim the Hope Credit. What do I need to save to claim this credit?
You should keep all your canceled checks that were used to pay for the qualifying expenses and any other documentation showing the amount of tuition and fees paid.
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I am currently attending school for a second bachelor's degree. I completed my original degree several years ago. Am I eligible for the Hope Credit because I am just entering my second year of this bachelor's degree program?
Since you have already completed your first two years of postsecondary education, the courses that you are now taking do not qualify for the Hope Credit. You may be eligible for the Lifetime Learning Credit.
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I have returned to college after several years. I attend a community college and have not received an associate's degree as of yet. Can I claim the Hope Credit for tuition I paid this year?
You can only claim the Hope Credit if this is one of the first two years of postsecondary schooling.
For example, if you attended classes for only 1 or 2 semesters, you would still be in your first two years of post secondary school. If you attended 5 or more semesters, you would not be considered in your first two years of post secondary school even if you have not attained your associate's degree.
If you don't qualify for the Hope Credit, you may quality for the Lifetime Learning Credit
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How do I complete Form 2441 if I have flexible dependent care benefits through my employer?
You must complete Part III of Form 2441, Child and Dependent Care Expenses, (or Form 1040A, SCHEDULE 2, Child and Dependent Care Expenses for Form 1040A Filers) to claim the exclusion of the benefits from income even if you cannot claim the credit. Enter your total employer-provided dependent care benefits on line 10 (this amount should appear in box 10 of your Form W-2) and your qualified expenses on line 13. The last five lines of Part III will determine whether you can also take the credit and what your dollar limit is on qualified expenses. Complete Part I, Persons or Organizations Who Provided the Care, also.
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I am self-employed, but did not have net a profit last year. Is it correct that we do not qualify for the Child Care Credit on our joint return even though my wife received dependent care benefits on her W-2 box 10?
Generally, yes. When you complete Part III of Form 2441, Child and Dependent Care Expenses, which you must do to claim excluded benefits, line 17 asks you to enter the smallest of:
- your dependent care benefits,
- your qualified expenses,
- your earned income, or
- your spouse's earned income.
If you had a loss from self-employment and no other earned income, your earned income would be $0, unless you can use one of the optional methods on Form 1040, SCHEDULE SE, Self-Employment Tax. That would mean that the amount in box 10 of your wife's Form W-2 would have to be included in income. (For more information on the optional methods of computing self-employment tax, refer to Publication 533, Self-Employment Tax, or Instructions for Form 1040, Schedule SE, Self-Employment Tax.) If you were a full-time student during any five calendar months during the year, you would have deemed earned income of $200 per month.
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Is a flexible spending account for dependent care a dependent care benefit?
Yes. If the flexible spending account is providing you with a dependent care benefit, then it should be reported in box 10 of your Form W-2. These accounts are funded through a salary reduction, so the contribution to the account is considered an employer contribution. When you receive a dependent care benefit from your employer, you must complete Part III of Form 2441, Child and Dependent Care Expenses, (or Form 1040A, SCHEDULE 2, Child and Dependent Care Expenses for Form 1040A Filers) to see if the benefits are fully excluded from income. You may be able to also claim a credit for child and dependent care expenses if the excluded benefits are less than the dollar limit on qualified expenses.
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My mother has recently moved into a nursing home. Her social security and other income does not cover all the expenses. My siblings and I must make up the difference. Can the portion I (we) pay be considered for dependent care and be deducted or credited?
If you or one of your siblings can claim your mother as a dependent on their tax return, then that sibling can also claim the medical expenses which the sibling paid on behalf of your mother. The medical expenses which the other siblings pay would not be deductible.
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Can a custodial parent claim the Child Tax Credit if the noncustodial parent claims the child as a dependent due to the divorce agreement?
The custodial parent cannot claim the Child Tax Credit for a child in the tax year that the noncustodial parent takes the exemption for that child. Please refer to the 1040 Instruction Booklet index for Child Tax Credit. The referenced pages will explain who qualifies for this credit and how to calculate it.
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Does the Form 8332 (used to release the exemption to the noncustodial parent) affect the Child Tax Credit?
Yes. The Child Tax Credit can only be claimed by the parent claiming the exemption. In this case the noncustodial parent would qualify for the dependency exemption and therefore the child tax credit. Please refer to the 1040 Instruction Booklet or the 1040A Instruction Booklet index for Child Tax Credit. The referenced pages will explain who qualifies for this credit, and how to calculate it.
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Can you file for the Child Tax Credit and the Child Care Credit, too?
The Child Tax Credit and the Child and Dependent Care Credit can both be claimed on the same return. They can be claimed on either Form 1040, U.S. Individual Income Tax Return, or Form 1040A, U.S. Individual Income Tax Return. Please refer to the 1040 Instruction Booklet or the 1040A Instruction Booklet index for Child Tax Credit. The referenced pages will explain who qualifies for Child Tax Credit, and how to calculate it. Publication 503, Child and Dependent Care Expenses, has more information for the child care credit.
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If I file using filing status married filing separately, can I still claim the Additional Child Credit?
Yes. You will need to complete Form 8812, Additional Child Tax Credit, and attach it to your Form 1040 or 1040A. Please refer to the 1040 Instruction Booklet or the 1040A Instruction Booklet index for Child Tax Credit. The referenced pages will explain who qualifies for Child Tax Credit, and how to calculate it.
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Is a grandchild, who is a dependent, eligible for the Child Tax Credit?
Your grandchild under the age of 17 who is your dependent and is a U.S. Citizen or Resident Alien is a qualifying child for the child tax credit. Please refer to the 1040 Instruction Booklet or the 1040A Instruction Booklet index for Child Tax Credit. The referenced pages will explain who qualifies for Child Tax Credit, and how to calculate it.
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Can I get the Child Tax Credit for a child with an ITIN, not a social security number?
Yes, with an individual tax identification number (ITIN), you can claim the Child Tax Credit if you otherwise qualify. The Child Tax Credit can only be claimed by the parent claiming the child as a dependent.
Please refer to the 1040 Instruction Booklet or the 1040A Instruction Booklet index for Child Tax Credit. The referenced pages will explain who qualifies for Child Tax Credit, and how to calculate it.
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My child lived for only 12 days and I never received a social security number, because the Social Security Administration will not issue a social security number for a deceased child. Can I still qualify for the Child Tax Credit?
Yes, you may attach a copy of the child's birth certificate and enter "DIED" in column 2 of line 6c. You will also need to put a check mark in column 4 of line 6c. Please refer to the 1040 Instruction Booklet or the 1040A Instruction Booklet index for Child Tax Credit. The referenced pages will explain who qualifies for Child Tax Credit, and how to calculate it.
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What is a Lifetime Learning Credit?
A nonrefundable tax credit up to $1,000 per family for all undergraduate and graduate level education.
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Who is eligible for the Lifetime Learning Credit?
An eligible student can be you, your spouse, or an eligible dependent. In any one tax year, only one person can claim a higher education credit for a student's expenses.
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I'm a full-time graduate student and am required pay a comprehensive fee as part of my enrollment. This fee includes student center fees, health fees, bus fees, and athletic fees. Does this comprehensive fee qualify for the Lifetime Learning Credit?
If a student is required to pay a comprehensive fee to an eligible educational institution that includes charges for tuition, fees, and personal expenses, the portion of the comprehensive fee allocable to personal expenses is not eligible for the credit. The allocation must be made by the institution using a reasonable method.
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Is the Lifetime Learning Credit used only to reduce the tax people owe or may it give me a refund even if I do not owe any tax?
Both the Hope Credit and the Lifetime Learning Credit are nonrefundable credits. In other words. they only reduce your federal income tax liability; they do not give you a refund if you do not owe any tax.
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Can the Life Time Learning Credit be used for a high school student taking classes at an approved college prior to graduation from high school?
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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What information on this Form 1098-T statement from my university do I use to figure my Lifetime Learning Credit?
If you claim an education credit, keep Form 1098-T with your tax records. The information on the form will not be used to figure the amount of your credit. The Form 8863, Education Credits (Hope and Lifetime Learning Credits), is used to calculate your credit.
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Can nonresident aliens claim the Lifetime Learning Credit for tuition paid to go to school?
If you are a nonresident alien for any part of the year, you generally cannot claim the education credits. However, if you are married and choose to file a joint return with a U.S. citizen or resident spouse, you may be eligible for the Hope or Lifetime Learning Credit.
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I did not attend school this year, but made loan payments for college tuition. Does money paid for student loans apply to the Lifetime Learning Credit?
No, payments on your student loans do not qualify for the Lifetime Learning Credit. However, the interest on the student loans may be deductible for Federal income tax purposes if you met certain qualifications. For more information, refer to Publication 970, Tax Benefits for Higher Education.
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I am a student who is claimed as a dependent on my parent's tax return. I pay my college tuition out of my own earnings. Can I take the Lifetime Learning Credit on my tax return?
No, if your parents claim you as a dependent, you cannot claim either of the education credits. However, any qualifying tuition payments that you made can be claimed by your parents as paid by themselves and may qualify them for the Hope or Lifetime Learning Credit.
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Am I eligible to claim both my job education expenses (minus 2% of AGI) and the Lifetime Learning Credit on my taxes?
You can not deduct educational expenses and claim a credit for those same expenses. You must choose one or the other.
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If my employer reimbursed my education expenses and included the reimbursement in my taxable income, is the amount still eligible for the Lifetime Learning Credit?
The amount included as taxable income is eligible for the Lifetime Learning Credit. If your tuition is paid by your employer and not included in your taxable income, then that amount is ineligible for the education credits due to the provision that no double benefits are allowed.
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I am trying to understand what is a qualified expense under the Lifetime Learning Credit. The guidelines states books are included in qualified expenses only if the fee must be paid to the institution as a condition of enrollment. I am required to have books for classes that I am taking, and I purchased the books from the college bookstore. Can I add the cost of these books to my qualified expenses?
The Federal Tax Regulations provides an example that answers this question: First-year students at College W are required to obtain books and other reading materials used in its mandatory first-year curriculum. The books and other reading materials are not required to be purchased from College W and may be borrowed from other students or purchased from off-campus bookstores, as well as from College W's bookstore. College W bills students for any books and materials purchased from College W's bookstore. The fee that College W charges for the first-year books and materials purchased at its bookstore is not a qualified tuition and related expense because the books and materials are not required to be purchased from College W for enrollment or attendance at the institution.
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Can I get the Credit for the Elderly or the Disabled?
Generally, if you were age 65 or older or disabled and your income and nontaxable social security and other nontaxable pension are below specified amounts, you may be able to take this credit. For more details, refer to Tax Topic 603, Credit for the Elderly or the Disabled, or Publication 524, Credit for the Elderly or the Disabled.
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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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I heard there is a credit for hiring certain groups of workers, such as veterans or ex-felons. Is that the same thing as the Work Opportunity Tax Credit?
The work opportunity credit provides an incentive to hire individuals from targeted groups that have a particularly high unemployment rate or other special employment needs. The credit can be as much as 40% of the qualified wages you pay to individuals who begin work for you between October 1, 1996, and December 31, 2001. The credit can be claimed by filing Form 5884, Work Opportunity Credit.
An individual is a member of a targeted group if he or she is a:
- Qualified recipient of Aid to Families with Dependent Children (AFDC) or successor program.
- Qualified veteran.
- Qualified ex-felon.
- High-risk youth.
- Vocational rehabilitation referral.
- Qualified summer youth employee.
- Qualified food stamp recipient.
- Qualified SSI recipient.
An individual is not considered a member of a targeted group unless your state employment security agency certifies him or her as a member. This certification requirement can be satisfied in either of two ways:
- 1) On or before the day on which the individual begins work for you, you have received a certification from your state employment security agency that the individual is a member of a targeted group, or
- 2) On or before the day you offer employment to an individual, you complete Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity and Welfare-to-Work Credits and send it to your state employment security agency no later than the 21st day after the individual begins work.
You must receive the certification before claiming the credit.
Refer to Tax Topic 750, Employer Tax Information, and Tax Info for Business, on this site for other employer information.
References:
- Form 5884, Work Opportunity Credit
- Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity and Welfare-to-Work Credits
- Tax Topic 750, Employer Tax Information
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