Hope Scholarship

"Hope Scholarship" submitted by SchoolGrantsfor Editorial Team and last updated on Monday 9th January 2012

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The American Opportunity/ Hope Scholarship or Credit is somewhat of a misnomer. It is not a scholarship at all. Rather, it is a tax credit available to certain taxpayers.

During the first two years of post-secondary education, students or parents may be able to take advantage of the Hope Scholarship tax credit. The credit can be as much as $1,500 per student per year for tuition and related expenses paid after December 31, 1997.

The American Opportunity credit is a temporary modification to the existing Hope credit, and is subtracted from the tax your family owes instead of from taxable income like a tax deduction. Your family can claim a tax credit of up to $2,500† for each eligible dependent. The American Opportunity/Hope credit can be claimed for four post-secondary education years. However, the credit is for amounts paid in 2009 and 2010 only.

The tax credit will equal 100% of the first $1,000 of tuition and fees required for enrollment and attendance (not room or board) and 50% of the next $1,000 paid during the applicable tax year to an institution that participates in the U.S. Department of Education student aid programs.

To qualify, the student must have earned a high school diploma or equivalent degree, be enrolled at least half-time for one academic period during the tax year, and must not have been convicted of a federal or state drug felony.

The Scholarship is available to individuals with a modified adjusted gross income (AGI) under $40,000. For individuals, the credit is phased out for AGI's between $40,000 and $50,000. The credit is also available to joint filers with AGI's under $80,000 with the credit phased out for AGI's between $80,000 and $100,000.

Eligible family members include the taxpayer, the taxpayer's spouse and the taxpayer's dependent(s).

Expenses paid after December 31, 1997 for education/academic periods beginning in 1998 may be eligible. You cannot combine the Hope Scholarship Credit with the Lifetime Learning Credit or the Education IRA in the same year for the same child. Therefore, the maximum American Opportunity/Hope credit per student is $2,500†, a $700 increase from the previous Hope credit.

The exact amount of the American Opportunity/Hope credit depends on:

The American Opportunity/Hope credit allows you to claim:


An eligible taxpayer must:

The eligible student (or the taxpayer, if the taxpayer is also the student) must be enrolled at least half time in an eligible program leading to a degree or certificate at an eligible school during the calendar year. (Your college can help you determine whether it meets this requirement.) Also, the eligible student must not have been convicted of a federal or state felony drug offense before the end of the tax year in which he/she is enrolled.

You cannot claim the American Opportunity/Hope credit if:

You can receive a refund of up to 40 percent of the amount of the credit you are eligible to receive, up to $1,000, if your family owes less in taxes than the maximum amount of the American Opportunity/Hope credit for which your family is eligible.

Note for the American Opportunity / Hope and Lifetime Learning credits:

Also Check: Tax Credits For American Opportunity / Hope and Lifetime Learning

For Your Information (FYI):
This information’s covers a variety of important tax topics related to higher education. It is intended for your educational use and not as legal or tax advice; it does not cover every facet or the full scope of this subject. We highly recommend that you consult a professional tax advisor or attorney and encourage you to visit the Internal Revenue Service Web site, where you will find the complete text of various relevant IRS publications.

IRS Publications

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