Created by the Taxpayer Relief Act of 1997, the Hope Credit reduces the amount of your Federal taxes based on qualifying "out-of-pocket" educational expenses paid for yourself, your spouse or your dependent child. Qualifying expenses include tuition and certain fees less any grants and scholarships received. It does not include room, board, books and transportation.

Benefits and Requirements
Through the Hope Credit, you can claim a tax credit of up to $1,650 for a qualifying family member who is attending an eligible school.

• You can claim 100% of the first $1,100 of your out-of-pocket educational expenses for each student, plus 50% of the next $1,100.
• The student must be in the first or second year of a program pursuing an undergraduate degree or other recognized education credential and enrolled at least half time

Restrictions
The Hope Credit you are allowed may be limited by the amount of your income, the amount of your tax or your filing status. Only one taxpayer (either the student or the parent) may claim this tax credit. In addition, you may claim only one education tax credit — either the Hope Credit or the Lifetime Learning Credit — per student, per tax year. If you pay qualified education expenses for more than one student, you can claim the Hope Credit for one student and the Lifetime Learning Credit for the other, in the same year.

Tax credits and deductions are different: a tax credit directly reduces the amount of income tax you may have to pay, while a deduction reduces the amount of income subject to tax.

The information contained in this section is from IRS Publication 970: Tax Credits for Education. PNC and Villanova University do not provide tax advice and makes no representation or warranty as to the accuracy of the information. Please consult your tax advisor for tax advice matters contained in this section.

For more information, visit www.irs.gov or call 1-800-829-1040.