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HOPE Scholarship Tax Credit

Following is information that may be helpful to you. If you have any questions concerning the new HOPE Scholarship Tax Credit, please consult your tax advisor.

New tax credits may be elected by individuals for tuition expenses incurred by students pursuing University degrees. The HOPE Scholarship credit provides a maximum allowable credit of $1,500 per student for each of the first two years of post-secondary education. Specifically, the HOPE Scholarship credit initially allows taxpayers a 100 percent credit per eligible student for the first $1,000 of tuition expenses (but not room, board or books) and a 50 percent credit for the second $1,000 of tuition paid.

The HOPE credit is available for qualified tuition and related expenses incurred for the taxpayer, the taxpayer’s spouse, or the taxpayer’s dependent. The allowable amount of the credit is reduced for taxpayers that have modified adjusted gross income (AGI) above certain amounts. The phase out of the credits begins for most taxpayers when modified AGI reaches $40,000; the credits are completely phased out when modified AGI reaches $50,000. For joint filers, the phase out range is $80,000 to $100,000.

The HOPE credit is not available to married taxpayers if separate returns are filed, only if a joint return is filed. Also, the HOPE credit is available only for the first two years of post-secondary education. Further, the credit can only be elected for two tax years with respect to one student (including elections by the taxpayer or any other individual).

The HOPE credit is available only for qualified tuition and related expenses paid during the tax year for education furnished to the student during an academic period beginning during that tax year. If tuition is paid during one tax year for an academic period that begins during the first three months of the following year, that academic period is treated as beginning during the year of payment.

No HOPE credit is allowed for qualified tuition and related expenses for any academic period if, before the end of the tax year with or within which such academic period ends, the student is convicted of a federal or state felony consisting of the possession or distribution of a controlled substance.

In order to claim the HOPE credit the student must be an "eligible student." An "eligible student" is one who is enrolled in a program leading to a degree, certificate or other recognized educational credential at an eligible educational institution and who is carrying at least one-half of the normal full-time work load for the course of study being pursued. A student who is studying abroad qualifies for the HOPE credit provided that the program is approved for credit by the institution at which the student is enrolled.

The HOPE credit applies to expenses paid after December 31, 1997 for education furnished in academic periods beginning after that date.

Missouri Southern State University cannot provide individual tax advice and shall not be liable for damages of any kind in connection with this information. Accordingly, you should consult your tax advisor about your specific circumstances

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