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  • The Earned Income Tax Credit in Colorado
  • Learn More about the Earned Income Tax Credit
  • Employers: Help Your Workers Get Their Tax Credits
  • More Tax Credits
  • Non-Profits: Help Your Clients Get Their Tax Credits
  • Still Another Tax Benefit for Families! The Child and Dependent Care Credit
  • The Child Tax Credit: Extra Credit for Many Working Families!
  • Education Tax Credits for Families: The Hope Credit
  • Education Tax Credits for Families: The Lifetime Learning Credit
  • Saver's Tax Credit: Workers Can Save for Retirement and Reduce Income Taxes

Education Tax Credits for Families: The Hope Credit

What is the Hope Credit?

The Hope Credit has been modified and expanded and is also referred to as the American Opportunity Tax Credit.  The Hope credit can help you get money back for expenses during the first 4 years of post-secondary education.

• You can get money back for qualified education expenses (like tuition, books, supplies and equipment) for the first 4 years of college or vocational school.
• Get up to $2,500 per eligible student, per year.
• Each student must be enrolled in school at least half-time, for at least one academic period in 2009.
• Each student must be working on getting a degree, certificate, or other credential.
• You can't claim a credit for graduate and professional-level programs.
• Students with felony drug convictions can't claim the credit.

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 education expenses of higher education.
2. You pay the education expenses of an eligible student.
3. The eligible student is either yourself, your spouse, or a dependent for whom you claim an exemption on your tax return.

Who Cannot Claim the Hope Credit?

You cannot claim the Hope Credit if any of the following apply.

• Your filing status is married filing separately.
• You are listed as a dependent in the exemptions section on another person's tax return (such as your parents).
• Your modified adjusted gross income is $90,000 or more ($180,000 or more in the case of a joint return).
• You (or your spouse) were a nonresident alien for any part of 2009 and the nonresident alien did not elect to be treated as a resident alien for tax purposes.
• You cannot claim the Hope Credit if you claim a tuition and fees deduction for the same student in 2009.

No Double Benefit Allowed

You cannot do any of the following.

1. Deduct higher education expenses on your income tax return (as, for example, a business expense) and also claim the Hope Credit based on those same expenses.
2. Claim the Hope Credit in the same year that you are claiming a tuition and fees deduction for the same student.
3. Claim a Hope credit and a Lifetime Learning Credit based on the same qualified education expenses.
4. Claim the Hope Credit based on the same expenses used to figure the tax-free portion of a distribution for a Coverdell education savings account or qualified tuition program.
5. Claim the Hope Credit based on qualified education expenses paid with tax-free scholarship, grant, or employer-provided educational assistance.

Who Can Claim a Dependent's Expenses?

If there are qualified education expenses for your dependent for a year, either you or your dependent, but not both of you, can claim the Hope Credit for your dependent's expenses for that year.

For you to claim the Hope Credit for your dependent's expenses, you must also claim an exemption for your dependent.

Expenses paid by dependent

If you claim an exemption on your tax return for an eligible student who is your dependent, treat any expenses paid (or deemed paid) by your dependent as if you had paid them. Include these expenses when figuring the amount of the Hope Credit.

Expenses paid by you

If you claim an exemption for a dependent who is an eligible student, only you can include any expenses you paid when figuring the amount of the Hope Credit. If neither you nor anyone else claims an exemption for the dependent, only the dependent can include any expenses you paid when figuring the Hope Credit.

Expenses paid by others

Someone other than you, your spouse, or your dependent (such as a relative or former spouse) may make a payment directly to an eligible educational institution to pay for an eligible student's qualified education expenses. In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. If you claim an exemption on your tax return for the student, you are considered to have paid the expenses.

Form 1098-T.

To help you figure your hope credit, you should receive Form 1098-T. Generally, an eligible educational institution (such as a college or university) must send Form 1098-T (or acceptable substitute) to each enrolled student by January 31, 2010. An institution may choose to report either payments received (box 1), or amounts bill (box 2), for qualified education expenses.