Publications

• 30 Second Ideas
• Accounting Updates
• Alerts
• Articles
• Business Surveys
• Construction Edge
• Healthcare Edge
• Insurance Edge
• Legal Talent
• Manufacturing Edge
• Not-for-Profit Edge
• Quick Links & Good Ideas
• SEC Edge
• Strategy Insights Blog
• Surviving the Upturn
• Tax Highlights

Hope Credit up to $1,800 Applies to First Two Years of College

Under the Hope Credit, a tax credit is allowed for qualified expenses paid for the first two years of post-secondary education. For tax year 2008, taxpayers can claim up to $1,800 of credit (up from $1,650 in 2007). The credit is claimed by attaching Form 8863, Education Credits, to the federal tax return.

How does the Hope Credit work?

The Hope Credit is available on a per-student basis. For example, if you are the parent of 18-year-old triplets who will begin college in fall 2008, and there are qualified education expenses for each of them, you will be able to claim up to $1,800 of Hope Credit for each student ($5,400 total) on your 2008 personal return, if your adjusted gross income is less than $48,000 ($96,000 for a joint return).

What are the income limitations?

Phase-out of the Hope Credit begins when a taxpayer's adjusted gross income (AGI) exceeds $48,000 in 2008 for a single person and $96,000 in 2008 on a joint return. The credit is completely phased out when AGI exceeds $55,000 for a single person and $110,000 on a joint return.

Take advantage of a tax-planning opportunity

This credit cannot be claimed by a person claimed as a dependent on another's return. If the taxpayer is eligible to be claimed by another tax filer but not so claimed, the taxpayer may take the credit. Thus, the Hope Credit could provide a planning opportunity for some high-income taxpaying parents whose dependency deduction is phased out and whose child has taxable income, tax liability and college expenses.

For more information, contact Mike Calahan at 312-980-2996 or Tara Wells at 312-980-3277 for more information.

This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.