Hope Credit

If any person was so busy that he couldn’t go to the college at the age of 18 and has started working from that age, then there is a way by which he can take fullest advantage for tax-credit on education. Hope credit has been introduced as a 3^rd substitute of Lifetime-learning-credit as well as deduction on expenses on higher studies.

The courses that a person takes should fulfill below requirements:

• Eligible institutions for education must offer the course. Eligible institutions for education mean accredited-public, proprietary or nonprofit post secondary-institution.
• The person must enroll himself in program for non degree-program, undergraduate-degree, or program for graduate-degree directed for improving skills of job or for acquiring a new job. The person is not bound to be a student for full time / half time rather he can take single subject if he likes. Subjects related to hobby or sports are not qualified.

It is slightly difficult for being qualified for Hope credit when compared with lifetime-learning-credit / expense-deduction for higher studies, as one must fulfill all the below additional perquisites for Hope credit:

• Individual should be having his name in 1 of 1^st two college years (sophomore or freshman year).
• He must have his name entered in degree-program.
• He must attend school for minimum half time.
• Credit may be claimed by him in just 2 tax-years.

Hope credit is different from higher studies expense-deduction and Lifetime-Learning-Credit on the ground that benefit at max is being applied / person and not / family. $1,800 / eligible individual are the maximum amount of Hope credit for the year 2008. Once max credit is computed one should determine as whether he has the right to claim for full-amount. Hope Credit is claimed on Form 1040’s 2^nd page in Tax-and-Credits. One must complete and attach the Form 8863 of his tax-return.

Questions:

• Define Hope Credit and how is it claimed?
• What are the qualifications and limit amount of hope credit?