Explaining the Hope Scholarship Credit
The Hope Scholarship Credit is available to U.S. taxpayers who have spent money to pay for the first two years of their higher education. In order for this credit to be claimed, the student must be attending school at least part time. This credit can be claimed for any education-related expense that the taxpayer has made, or the taxpayer’s spouse or dependent has incurred.
The eligible person is allowed credit for the first $1,100 in addition to half of the qualifying expenses over $1,100 that is credited against the person’s total tax liability. The maximum amount of credit is not to exceed $1,650 per person.
A qualified tuition and related expense is defined as tuition and fees paid at colleges and universities. It does not include insurance costs, room and board, student activity fees or athletic fees.
There are limitations to the Hope Scholarship Credit. The credit will be forfeited if the student is convicted of a felony drug offense. Also, the student cannot take the Hope Scholarship Credit and a Lifetime Learning credit in the same year. Thirdly, a student can only take the credit until the first two years of college are completed.
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