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Definition / Meaning of

Hope Scholarship Credit

Categories: Finance,

You may qualify for a Hope scholarship tax credit for money you spend on qualified educational expenses for yourself, your spouse, or a dependent child.To qualify, the student must be enrolled at least halftime in the first or second year of a qualified higher education institution pursuing a degree or other credential.Qualified institutions include liberal arts colleges, universities, and vocational, trade, or technical schools. If two qualifying students are enrolled at the same time, you may take two Hope tax credits.To qualify for this credit, your modified adjusted gross income must fall within the annual limits that Congress sets. Those amounts tend to increase slightly each year.If you claim the credit while you're taking withdrawals from tax-free college savings plans such as a section 529 plan or an education savings account (ESA), you'll have to plan carefully. Your withdrawals will lose their qualified status and be subject to tax and penalty if you use them to pay for the same expenses for which you claim the tax credit. You can't take the credit, though, if you claim a tuition and fees deduction in calculating your adjusted gross income.