The amount of the credit depends on income, the amount of tuition and fees that have been paid, as well as the amount of scholarships and other allowances that have already been applied towards the tuition money. In addition, the number of eligible dependents in the family also has an effect on the amount of the tax credit.

How can I qualify for the Hope education tax credit?
Qualifying for the Hope education tax credit has different requirements for the family and the student. In order to file, there must be an eligible taxpayer (the family, or the student if he claims himself) and a student. The student can be both the eligible taxpayer and eligible student, but not if his family claims him as a dependant.

The family paying the taxes must first file their regular federal tax return; families don't get refunds for the Hope credit if they're not paying taxes. Qualifying families must also claim the student as a dependent on their tax return. (This rule does not apply if the credit is being used for the taxpayer or his or her spouse.)

There are also limitations on income to qualify for the Hope credit. If the Modified Adjusted Gross Income (MAGI) is more than $55,000 for single-parent households or more than $110,000 for married family households filling a joint return, you can't qualify or the credit.

In order for the student to qualify, he or she must be enrolled in an eligible program that leads to an eligible degree at an accredited school. The student must be at least a half-time student and have been enrolled for at least one academic period (semester or term). In addition, the student will not qualify for the credit if he or she has already completed their first two years of college at the undergraduate level.

Students who have been convicted of any kind of drug felony prior to 2006 are not eligible for the Hope tax credit.

How do I apply?
If you meet the above requirements and would like to apply for the Hope Scholarship, there are several things you need to do to apply. First, you must report the amount of tuition and fees you have paid, as well as any scholarships, grants, or untaxed income you used to pay for your tuition. (This information can be found in the 1098-T statement your school is required to send to you). Once you receiver this information, you can fill out the IRS form 8863, which allows you to claim the credit.

Because filling out the forms can be confusing, you may want to have a tax advisor or someone from your financial aid department assist you in filling out the forms.

For those who qualify, the Hope education tax credit is a great way to get a credit on the taxes paid for tuition.