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.

What expenses qualify for the education credits?

Expenses that qualify for an education credit are qualified tuition and related expenses required for enrollment or attendance at an eligible educational institution. An eligible educational institution includes most accredited colleges, universities, vocational schools, or other post-secondary educational institutions eligible to participate in the student aid programs administered by the Department of Education.

Qualified expenses do not include expenses student activities, athletics (unless the course is part of the student's degree program), for room and board, insurance, transportation, or similar personal, living, or family expenses. The cost of books and equipment are generally not qualified expenses because eligible educational institutions usually do not require that the cost of the books or equipment be paid to the institution as a condition of the student's enrollment or attendance at the institution.

Do tuition and related expenses paid to attend a private high schools qualify for the education credits?

No. Expenses paid to attend high school do not qualify for the education credits because a high school is not an eligible educational institution. In general , an eligible educational institution is an accredited college, university, vocational school, or other post-secondary educational institution including accredited, public, nonprofit, and proprietary (private-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. For more information, refer to Form 8863 (PDF), Education Credits (Hope and Lifetime Learning Credits), Publication 970, Tax Benefits for Education, or Tax Topic 605, Education Credit.

Can I claim an education credit if I am married but file separately?

No. A married individual filing a separate return can not claim the Hope Credit or the Lifetime Learning Credit.

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

References:

• Publication 970, Tax Benefits for Education
• Tax Topic 605, Education Credits
• Form 8863 (PDF), Education Credits (Hope and Lifetime Learning Credits)

If I pay college tuition and fees with a scholarship, can I claim an education credit on Form 8863 for those payments?

You can not claim a credit for the amount of higher education expenses paid for with a tax-free scholarships.

For more information, refer to Form 8863 (PDF), Education Credits (Hope and Lifetime Learning Credits). Publication 970, Tax Benefits for Education, and Tax Topic 605, Education Credits, or Tax Topic 421, Scholarship and Fellowship Grants.

If the amount of my qualified tuition and related expenses is greater than the amount of my scholarship, may I claim the excess expenses on Form 8863?

Yes, fill out Form 8863 (PDF), Education Credits (Hope and Lifetime Learning Credits).

You must reduce the total 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, can not be applied to qualified tuition and related expenses.

For more information, refer to Publication 970, Tax Benefits for Education or Tax Topic 605, Education Credits.

References:

• Publication 970, Tax Benefits for Education
• Tax Topic 605, Education Credits
• Tax Topic 513, Educational Expenses
• Form 8863 (PDF), Education Credits (Hope and Lifetime Learning 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.

What is a Lifetime Learning Credit?

This credit is a nonrefundable tax credit with a dollar limit per family that is available for qualified tuition and related expenses of higher education whether the student is at the undergraduate or graduate level. The Lifetime Learning Credit is calculated by taking a percentage of the qualified educational expenses paid. For additional information refer to Publication 970, Tax Benefits for Education, Tax Topic 605 , Education Credits, or Form 8863 (PDF), Education Credits (Hope and Lifetime Learning Credits).

Who can claim the Lifetime Learning Credit?

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

1. You pay qualified tuition and related expenses of higher education.
2. You pay these 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.

The Lifetime Learning Credit is based on qualified tuition and related expenses you pay for yourself, your spouse, or a dependent for whom you can claim an exemption on your tax return.

As with the Hope Credit, generally, the Lifetime Learning Credit is allowed for qualified tuition and related expenses paid in the tax year for an academic period beginning in that year or in the first 3 months of the following year.

For purposes of the Lifetime Learning Credit, an eligible student is a student who is enrolled in one or more courses at an eligible educational institution to acquire or improve job skills

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.

You cannot claim the Lifetime Learning Credit if any of the following apply.

1. your filing status is married filing separately.

2. you are listed as a dependent in the Exemptions section on another person's tax return (such as your parent's). (See Who Can Claim a Dependent's Expenses, later.)

3. your modified adjusted gross income is above a specified amount. (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 for tax purposes. (For additional information, refer to Publication 519 U.S. Tax Guide for Aliens); or

5. you claim the Hope Credit for the same student in same year

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

Is an education credit available for the cost of a high school student taking college classes before graduation from high school?

The cost of college classes taken while a student is attending high school may qualify for the education tax credit if the requirement for the credit are met.

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