The HOPE Scholarship Credit is a federal income tax credit for qualified tuition and expenses of eligible post-secondary schools. The scholarship is available on a per student basis, for each student listed as an exemption on the taxpayer’s federal income tax return (i.e., the taxpayer, the taxpayer’s spouse, and eligible dependents), who was enrolled at least part time in a certificate or degree program in 2009.

What is an “eligible dependent”?

A taxpayer may claim a dependency exemption for his/her unmarried child if:
1) the taxpayer supplies more than half of the child’s support for the taxable year, and
2) the child is under age 19 or a full-time student under age 24.

How much credit can a taxpayer claim?

The credit amount claimed is equal to 100% of the first $1,200 spent on qualified tuition and expenses, plus 50% of the next $1,200 of qualified tuition and expenses, to a maximum of $1,800. However, the credit cannot reduce the tax liability below $0.

How does taxpayer income level affect the HOPE Scholarship?

The HOPE scholarship is gradually reduced for taxpayers who have modified gross income of $50,000 to $60,000, ($100,000 to $120,000 if filing jointly). The scholarship credit is not available to taxpayers with MAGI of more than $60,000, or $120,000 if filing jointly.

What is Modified Adjusted Gross Income?

MAGI is a taxpayer’s adjusted gross income plus any amount excluded from gross income under Sections 911, 931, or 933. These sections of the tax code pertain to income earned abroad, including Puerto Rico.

How does a taxpayer claim the HOPE Scholarship?

To claim the HOPE Scholarship, a taxpayer must file IRS Form 8863 with their federal income tax return.

Salisbury University is providing this information as a service to its students, but please keep in mind it is not an authority on taxation. Therefore, the University is not responsible for any misrepresentation of the IRS regulations. You should consult a tax advisor to determine if you qualify for the credit or for any other related questions.
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