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How to Apply for the Hope Education Credit

1.

Calculate the tuition and qualified expenses you paid for postsecondary education during the tax year. Activity fees, supplies and book fees only qualify if you are required to pay them in order to attend.

2.

Make sure the expenses were for a student in the first two years of schooling after high school. This typically means a college freshman or sophomore.

3.

Verify that the student was in a program leading to a degree, credential or certificate at an accredited educational institution.

4.

Verify that the student took at least half the normal full load of course work for at least one quarter or semester during the tax year.

5.

Make sure the student had never had a drug felony conviction.

6.

Fill out parts 1 and 3 of Form 8863. Unless income limits apply, your credit should be all of the first $1000 and half of the next $1000 of incurred expenses.

Tips and Warnings

  • You can use more than one Hope Credit during a tax year if more than one student qualifies.
  • You can use either the Hope Credit or the Lifetime Learning Credit for a student, but not both in the same year. Use the Hope Credit, if you can, since it is limited to the first two years, whereas the Lifetime Learning Credit has no time limitations.
  • You can use both the Hope and Lifetime Learning credits if they are for different students.
  • When you pay tuition and qualified expenses in the year before a term starts, as in a December payment for January classes, the payment qualifies for the credit for the year in which payment was made. Prepay these classes and get an early tax break.
  • The credit is limited at higher income levels. Household limits begin at $80,000 for married, filing jointly, and at $40,000 for single, head of household or qualifying widow(er).
  • Those married and filing separately cannot use the Hope Credit.


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