How is the amount of an education credit determined?

The amount of an education credit is determined by the amount of qualified tuition and related expenses you paid for each eligible student and the amount of your Modified Adjusted Gross Income (MAGI). For more information, refer to Form 8863 (PDF), Education Credits, Publication 970, Tax Benefits for Education, or Tax Topic 605, Education Credits.

Can I claim the Hope Credit or the Lifetime Learning Credit for higher education expenses paid by a government-subsidized loan?

Higher education expenses paid by the proceeds of a government subsidized loan expenses 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.

For more information, refer to Form 8863 (PDF), Education Credit (Hope and Lifetime Learning Credits), Publication 970, Tax Benefits for Education, or Tax Topic 605, Education Credits.

Who can claim the Hope Credit?

Generally, you can claim the Hope Credit if all three of the following requirements are met.

1. You pay qualified tuition and related expenses for the first 2 years of postsecondary education.
2. You pay the tuition and related expenses for an eligible student.
3. 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.

1. Your filing status is married filing separately.

2. You are listed as a dependent in the Exemptions section of another person's tax return (such as your parents'). See Who May Claim a Dependent's Expenses, later.

3. Your modified adjusted gross income can not be above a certain dollar amount. See, chapter 2 of Publication 970, Tax Benefits for Education . Modified adjusted gross income is explained later under Does the Amount of Your Income Affect the Amount of Your Credit

4. 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 more information, refer to Publication 519, U.S. Tax Guide for Aliens.

5. You claim the Lifetime Learning Credit for the same student in the same year. See, chapter 2 of Publication 970

In general, qualified tuition and related expenses are tuition and fees required for enrollment or attendance at an eligible educational institution

Eligible Education Institution. In general, an eligible educational institution is an accredited college, university, vocational school, or other postsecondary educational institution, including accredited, public, nonprofit, and proprietary (privately-owned, profit-making) postsecondary institutions. 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. The educational institution should be able to tell you if it is an eligible educational institution.

For a taxpayer to claim the Hope Credit, the student for whom you pay qualified tuition and related expenses must be an eligible student. .

1. Did not have expenses that were used to figure a Hope Credit in any 2 earlier tax years.
2. Had not completed the first 2 years of postsecondary education (generally, the freshman and sophomore years of college) before this tax year.
3. Was 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.
4. Was free of any federal or state felony conviction for possessing or distributing a controlled substance as of the end of the tax year.

For additional information, refer to Form 8863 (PDF), Education Credits (Hope and Lifetime Learning Credit) or Tax Topic 605, Education Credits.