Hope Credit &
Lifetime Learning Tax Credits - Information

What are the Hope and Lifetime Learning Tax Credits?

It is a nonrefundable credit taken against federal income taxes. The Hope Credit may be claimed for payments of qualified tuition and related expenses made on or after January 1, 2008, for academic periods beginning on or after January 1, 2008. The Lifetime Learning Credit may be claimed for the same expenses made on or after January 1, 2008. If a taxpayer is claiming a credit for the Hope Credit for a particular student, none of that student's expenses for that year may apply toward the Lifetime Learning Credit.

 

How much can a taxpayer claim?

For the Hope Credit, a taxpayer may claim a credit up to $1,500 of 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 $1,500 per eligible student who meet the enrollment criteria. For the Lifetime Learning Credit, the credit amount is up to $2,000 for qualified tuition and related expenses per return.

 

What is the criteria a student must meet to be eligible?

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). The Hope Credit may be claimed for a student who (1) is enrolled in 6 credits or more (2) is in one of the first two years of postsecondary education (3) is enrolled in a program leading to a degree or certificate, and (4) is free of any conviction for a Federal or State felony offense consisting of the possession or distribution of a controlled substance. For the Lifetime Learning Credit students are not required to be enrolled in 6 credits or more and are not required to be enrolled in the first two years of postsecondary education. Nonresident aliens generally are not eligible for either tax credit.

 

Is there a maximum income limit to be eligible to claim the tax credit?

The amount a taxpayer may claim is gradually reduced for taxpayers who have modified adjusted gross income above a specified amount. A tax specialist should be consulted; this information is not a substitute for professional advice.

 

Who may claim the tax credit?

An individual may claim the credit for his/her own qualified tuition and related expenses and the qualified tuition and related expenses of his/her spouse and other eligible dependents (including children) for whom the dependency exemption is claimed. Generally, a parent may claim the dependency exemption for his/her unmarried child if: (1) the parent supplies more than half the child's support for the taxable year, and (2) the child is under age 19 or is a full-time student under age 24.

 

What are "qualified tuition and related expenses" at BCC?

Qualified tuition and related expenses are the tuition and fees a student is required to pay in order to attend BCC. The courses which are included in the Credit must be courses that will lead the student toward a degree or certificate or other recognized educational credential. It does not include courses involving sports, games or hobbies unless it is part of the degree program.

 

If a student pays qualified tuition and related expenses using a combination of Pell Grant, a loan, a gift from a family member, and some personal savings, what expenses may be taken into account?

The student may take into account only out-of-pocket expenses in calculating the credit. Qualified tuition and related expenses paid with the student's earnings, a loan, a gift, an inheritance, or personal savings are taken into account in calculating the credit amount. However, qualified tuition and related expenses paid with a Pell Grant or other tax-free scholarship, a tax-free distribution from an Education IRA, or tax-free employer-provided educational assistance are not taken into account in calculating the credit amount.

 

Will I receive something from BCC?

By February 1, 2009 we will mail Form 1098-T to students for whom we received qualified tuition and related expenses. After that time information will be available on tuition & fees paid on the BCC Web Site.

How will the IRS know?

We are required to notify the IRS of the name, address, amount paid, and social security number of the student with respect to whom payments of qualified tuition and related expenses were received during 2008 for periods of attendance during 2008. Payments made in 2008 for periods of attendance that begin in January-March of 2009 may be claimed only on the 2008 Tax Return.