Hope & Life Time Learning Educational Credits
This is archived information that pertains only to the 2002 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.
How does 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 2 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.
References: 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 in that year?
No, you cannot take both credits in one year for the same student. However, eligibility for the Hope Credit depends on your status at the beginning of the calendar year. If you are classified as a second-semester sophomore during the spring semester and as a first-semester junior during the fall semester of that same year, the qualified expenses you pay for the fall semester may be taken into account for the Hope Credit because you had not completed the first 2 years of your secondary education when the year began.
References: - Publication 970 (PDF), Tax Benefits for Higher Education
- Tax Topic 605, Education credits
- Ref (p. 35 of 8/28/01 S 25A draft final regs (ex 3); 25A (b) (2) (c) )
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).
References: 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. For more information, refer to Publication 970 (PDF), Tax Benefits for Higher Education.
References: 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?
No, there is no requirement that you receive this form before you can claim these credits.
References: If tuition was paid by a government subsidized loan, can I still take the Hope or Lifetime Learning Credit?
If you take out a loan to pay higher education expenses, those expenses may quality for the credit if you will be required to pay back 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.
References: If education expenses were paid by a school loan, that the student has not began paying back, do the expenses still qualify for the Hope or Lifetime Learning Credits?
The rule for a school loan is the same as the rule for a government subsidized loan. Even though the loan proceeds are not income to you, expenses paid from the loan proceeds may qualify for the Hope or Lifetime Learning Credit if the loan must be repaid. The education credit is claimed in the year in which the expenses are paid, not in the year in which the loan is repaid.
References: 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?
To claim the credit, you will need to file Form 1040X (PDF), Amended U.S. Individual Income Tax Return, and attach Form 8863 (PDF), Education Credits (Hope and Lifetime Learning Credits).
References: A divorced father pays college tuition directly to the college for his child who is claimed as a dependent on his ex-wife's return. Is the divorced father eligible for either of the educational credits - Hope or Lifetime Learning?
No. The divorced father cannot claim an educational credit because he does not claim the child as a dependent. The ex-wife, however, can claim an educational credit because she is claiming the child as a dependent and, under a special rule, is treated as having paid the child's tuition. The child cannot claim the credit because he is being claimed as a dependent on his mother's return.
References: What is a Hope Credit?
It is a nonrefundable tax credit for a student's first 2 years of undergraduate education.
References: Who can claim the Hope Credit?
You can claim a Hope Credit for an eligible student who is: - Enrolled in one of the first 2 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.
- 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.
- 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.
References: What is the amount of the Hope Credit?
The maximum credit per student is $1,500 (100 percent of the first $1,000 of qualified tuition and related expenses, plus 50 percent of the next $1,000 of such expenses).
References: I understand for the Hope Credit I must be in my first 2 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 2 years?
The Hope Credit may be claimed for no more than 2 taxable years and may not be claimed if at the beginning of the taxable year the student has completed the first 2 years of postsecondary education at an eligible educational institution. If the student has not claimed a Hope Credit for more than 1 year and if the educational institution at which the student is enrolled ranks the student as being less than a first-semester junior at the beginning of the year, the student may be eligible to claim the Hope Credit.
References: Is tuition paid to a foreign university eligible for the Hope Credit?
Relatively few, 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.
References: I will be able to claim the Hope Credit. What records do I need 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.
References: 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?
No. Since you have already completed your first 2 years of postsecondary education, the courses that you are now taking do not qualify for the Hope Credit. However, you may be eligible for the Lifetime Learning Credit.
References: 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 at the beginning of the year, you are not classified as having completed the first 2 years of postsecondary education.
For example, if you attended classes for only one or two semesters, you would still be in your first 2 years of post secondary school. Generally if you attended five or more semesters, you would not be considered in your first 2 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 qualify for the Lifetime Learning Credit.
References:
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