Office of Student Financial Services | Brooklyn Campus

Tax Relief - Options to Relieve Some of a Family's Tax Burden

Hope Scholarship Credits:

Taxpayers may be eligible to claim a nonrefundable Hope Scholarship Credit for qualified education expenses, when they file their federal income tax returns. The Hope Scholarship Credit is not a scholarship in the traditional sense, but rather it is a tax credit that is subtracted from the tax a family owes. It is not a "deduction" or a way to reduce income, but rather a way to reduce the taxes a family owes. In fact, to receive this tax credit, a family must file a federal tax return and owe taxes.

This tax credit program provides for up to $1,500 which may be claimed for qualified education expenses for each eligible dependent in the taxpayer's family (i.e., the taxpayer, the taxpayer's spouse, or an eligible dependent) who is enrolled at least half-time in one of the first two years of postsecondary education, and who is enrolled in a program leading to a degree, certificate, or other recognized educational credential. This credit is available for tuition and related fees less grants, scholarships, and other tax-free educational assistance and may be claimed for two years.

An individual who pays qualified tuition may claim the Hope Scholarship Credit and related expenses at a postsecondary educational institution, provided the student whose expenses are being paid, and the institution, meet certain eligibility requirements. The student may be the taxpayer him/herself, and/or the taxpayer's spouse, and/or the taxpayer's other eligible dependents (including children) for whom the dependency exemption is claimed. Generally, a parent may claim the dependency exemption for his/her unmarried child if:

	1) the parent supplies more than half the child's support for the taxable year, and
	2) the child is under age 19 or the child is a full-time student under age 24.

A student can claim a Hope Scholarship Credit if he/she is:

1) enrolled for at least one academic period (e.g., semester, trimester, quarter) beginning during the tax calendar year, and be enrolled at least half-time in a program that leads to a degree, certificate, or other recognized educational credential for the first two years of postsecondary education (the minimum number of credits that is considered for half-time status at Long Island University is six) AND

2) free of any conviction for a Federal or State felony offense consisting of the possession/distribution of a controlled substance.

The term "qualified tuition and related expenses," means the tuition and fees an individual is required to pay in order to be enrolled or attend an eligible institution. Amounts paid for sports, games or hobbies are not eligible for the credit, unless they are part of the student's degree program.

The amount that may be claimed as a credit is generally equal to:

	(1) 100% of the first $1,000 of the taxpayer's out of pocket expenses for each student's qualified tuition and related expenses, PLUS
	(2) 50% of the next $1,000 of the taxpayer's out-of-pocket expenses for each student's qualified tuition and related expenses. Thus, the maximum credit a taxpayer may claim for a taxable year is $1,500, multiplied by the number of eligible students in the family

The amount a taxpayer may claim as a Hope Scholarship Credit for 2004 is gradually reduced for single taxpayers who have modified adjusted gross income between $42,000 and $52,000 or between $85,000 and $105,000 for joint filers. Taxpayers with modified adjusted gross income over $52,000 ($105,000 for married taxpayers filling jointly) may not claim the Hope Scholarship Credit. Both the dollar limitations on the expenses for which the credit may be claimed and the modified adjusted gross income limitation will be indexed for inflation anually.

The Hope Scholarship Credit is one of several tax initiatives that have passed legislation to offer some relief to those supporting the postsecondary educational goals of their families.