The Hope Credit is an education tax benefit available to taxpayers for qualified higher education expenses, including tuition, fees, and materials. Though it was replaced and expanded by the American Opportunity Tax Credit (AOTC) in 2009, it allowed up to $2,500 for a student enrolled at least half-time for one academic period.
For prior-year tax returns, you can only claim this credit for the first 2 years of post-secondary education, and there are income restrictions that affect eligibility.
How do I qualify?
- You pay qualified education expenses for higher education
- You pay the education expenses for an eligible student
- The eligible student is yourself, your spouse, or a dependent for whom you claim an exemption on your tax return.
However, if you paid out of pocket, the following expenses do not qualify:
- Room and board
- Transportation
- Insurance
- Medical expenses
- Student fees (not required for enrollment or attendance)
- Expenses paid for by tax-free educational assistance
- Expenses used for other tax deductions, credits, and education benefits
Our system determines if the Hope credit can be applied, or if it would be in your best interest to claim the Lifetime Learning Credit or the Tuition and Fees deduction.
What is the Tuition and Fees Deduction?
The Tuition and Fees Deduction expired after the 2020 tax year and has not been extended by Congress. This means that you cannot claim this deduction for tax years 2021 and later.
For tax years 2020 and prior, the tuition and fees deduction allows a maximum deduction of $4,000 from your income for qualifying higher education expenses. Because this is an adjustment to income, you do not have to itemize deductions to claim it.
Qualifying expenses include tuition and fees that you paid for yourself, your spouse, or your dependent for enrollment at an eligible post-secondary higher education institution.
The qualifications to claim this deduction are the same as the Hope Credit listed above. However, eligibility for this deduction is subject to certain income limits based on the filer’s modified adjusted gross income (MAGI). For instance, married couples who file jointly and earn more than $160,000, or single filers and heads of household who earn over $80,000, do not qualify.
