|Answer: Generally, you can claim the Hope Credit if all three of the following requirements are met:
- You pay qualified tuition and related expenses for the first 2 years of postsecondary education.
- The tuition and related expenses are for an eligible student.
- The eligible student is you, your spouse, or a dependent for whom you claim an exemption on your tax return.
You cannot claim the Hope Credit if any of the following applies:
- Your filing status is married filing separately.
- You are listed as a dependent in the Exemptions section of another person’s tax return (such as your parents’).
- Your modified adjusted gross income is above a certain dollar limitation.
- You (or your spouse) were a nonresident alien for any part of the tax year, and the nonresident alien did not elect to be treated as a resident alien for tax purposes.
- You claim the Lifetime Learning Credit for the same student in the same year.
In general, the Hope Credit is based on tuition and related expenses required for enrollment or attendance at an eligible educational institution.
For a taxpayer to claim the Hope Credit, the student for whom you pay tuition and related expenses must be an eligible student. To be an eligible student, generally, the student must:
- Not have had expenses that were used to figure a Hope Credit in any 2 earlier tax years.
- Not have completed the first 2 years of postsecondary education (generally, the freshman and sophomore years of college) before this tax year.
- Must have been enrolled at least half-time in a program that leads to a degree, certificate, or other recognized educational credential for at least one academic period beginning in the tax year.
- Must have been free of any federal or state felony conviction for possessing or distributing a controlled substance as of the end of the tax year.
For tax years 2009, 2010, 2011, and 2012, the American Opportunity Tax Credit modifies the Hope Credit as follows:
- The maximum amount of the credit is increased to $2,500.00.
- The credit can now be claimed for the first 4 years, not 2, of postsecondary education.
- The modified adjusted gross income limitations are increased.
- Qualified expenses include course materials.
- Generally, 40% of the Hope Credit is now refundable (up to $1,000).
However, for a student who attended an educational institution located in a Midwest disaster area, you can choose instead to claim the credit under the previous rules, but then you must use the previous rules for all students for whom you claim the credit.