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.

Through the Hope Credit, you may be able to claim a tax credit of up to $1,650 for qualifying education expenses, for a qualifying family member who is attending an eligible school. Most schools are eligible; please check with your school to confirm.

• 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, and the student must not have a felony drug conviction on their record. The Hope Credit is available only for two years per eligible student, and only until the first two years of post-secondary education are completed. 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.

Learn more about the other types of tax benefits available:

• Reduce taxes with the Lifetime Learning Credit
• Deduct student loan interest
• Receive tax-free treatment of canceled student loans
• Deduct tuition and fees for higher education
• Make early withdrawals from any type of individual retirement arrangement (IRA) for education costs without paying the 10% additional tax
• Cash in savings bonds for education costs without paying tax on the interest
• Receive tax-free educational benefits from your employer

A tax credit reduces the amount of income tax you may have to pay. Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself.

The information contained in this section is from IRS Publication 970: Tax Credits for Education. PNC does 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 800-829-1040.