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Taxpayers may be eligible to claim a nonrefundable Hope Scholarship Credit against their federal income taxes. The Hope Scholarship Credit may be claimed for the qualified tuition and related expenses of each student in the taxpayer’s family (i.e. the taxpayer, the taxpayer’s spouse, or an eligible dependent) who is enrolled at least half-time in one of the first two years of postsecondary education and who is enrolled in a program leading to a degree, certificate, or other recognized educational credential. The amount that may be claimed as a credit is generally equal to: (1) 100% of the first $1,100 of the taxpayer's out-of-pocket expenses for each student’s qualified tuition and related expenses, plus (2) 50% of the next $1,100 of the taxpayer's out-of-pocket expenses for each student's qualified tuition and related expenses. Thus, the maximum credit a taxpayer may claim for a taxable year is $1,650 multiplied by the number of students in the family who meet the enrollment criteria described above.
The amount a taxpayer may claim as a Hope Scholarship Credit is gradually reduced for taxpayers who have modified adjusted gross income between $47,000 and $57,000 ($94,000 and $114,000 for married taxpayers filing jointly). Taxpayers with modified adjusted gross income over $57,000 ($114,000 for married taxpayers filing jointly) may not claim the Hope Scholarship Credit. Both the dollar limitation on the expenses for which the credit may be claimed and the modified adjusted gross income limitation are indexed for inflation. See www.irs.gov/pub/irs-pdf/p970.pdf for additional information.
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