Get Latest WorkWORLD

Transition Services - Hope Tax Credit - South Carolina

The Hope Tax Credit is available on a per-student basis for the first two years of postsecondary education and makes it possible for eligible participants, their spouses, and dependent children to claim tax credits or, in some cases, deductions, for postsecondary education expenses.

A tax credit equal to all of the first $1,000 of tuition and fees (less scholarship, grants, and tax-free tuition benefits) and half of the next $1,000 of tuition and fees, for a maximum of $1,500 per student, is available to parents of dependent students or to students who are not claimed as a dependents on their parents' tax return. Beginning in 2002, the credit is indexed for inflation. IRS Form 8863 and Publication 970 provide information about the maximum credit amounts for 2002 tax returns and beyond.

The Hope Tax Credit can be claimed only for two tax years and applies only to the first two years of postsecondary education. Students must be enrolled at least half-time in a program that leads to a degree, certificate, or other educational credentials during at least one academic period that begins during the tax year.

An "above-the-line" deduction became available for course-work beginning January 1, 2002 to provide some relief to individuals and families whose income is too high to qualify for the Hope Tax Credit. Self-supporting students, including those who borrow to pay tuition, are eligible to take this deduction. Single filers with adjusted gross income (AGI) of up to $65,000 ($130,000 for joint filers) can deduct $3,000 per year in 2002 and 2003, and $4,000 per year in 2004 and 2005.

Education expenses paid for with tax-free grants, scholarship, and employer-provided tuition assistance are not eligible for the credits or for the above-the-line deduction. However, education expenses paid for with loans are eligible for these benefits.

The full value of the tax credit is available to married taxpayers filing jointly with an AGI of $80,000 or less and to single taxpayers with and AGI of $40,000 or less. The tax credits phase out gradually. When married taxpayers' AGI exceeds $100,000 or a single taxpayers' AGI exceeds $50,000, they are not eligible for these credits.

Additional Information

For more information, see http://www.sc.edu/bursar/hope.html

The IRS provides additional information in Publication 970, "Tax Benefits for Education" and on Form 8863 "Education Credits (Hope and Lifetime Learning Credits)". These items are available in PDF format (requires Adobe Acrobat) from the IRS website at:
http://www.irs.gov/formspubs/index.html

See also:

Transition Services - Overview

WorkWORLD™ Help/Information System

   Share/Save: Click the button or link at left to select your favorite bookmark service and add this page.

This is one topic from the thousands available in the WorkWORLD™ software Help/Information System.
Complete information about the software is available at: http://www.WorkWORLD.org