Internal Revenue Code:Sec. 25A. Hope and Lifetime Learning credits
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Location in Internal Revenue Code
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart A - Nonrefundable Personal Credits
Statute
Sec. 25A. Hope and Lifetime Learning credits
(a) Allowance of credit
In the case of an individual, there shall be allowed as a credit
against the tax imposed by this chapter for the taxable year the
amount equal to the sum of -
(1) the Hope Scholarship Credit, plus
(2) the Lifetime Learning Credit.
(b) Hope Scholarship Credit
(1) Per student credit
In the case of any eligible student for whom an election is in
effect under this section for any taxable year, the Hope
Scholarship Credit is an amount equal to the sum of -
(A) 100 percent of so much of the qualified tuition and
related expenses paid by the taxpayer during the taxable year
(for education furnished to the eligible student during any
academic period beginning in such taxable year) as does not
exceed $1,000, plus
(B) 50 percent of such expenses so paid as exceeds $1,000 but
does not exceed the applicable limit.
(2) Limitations applicable to Hope Scholarship Credit
(A) Credit allowed only for 2 taxable years
An election to have this section apply with respect to any
eligible student for purposes of the Hope Scholarship Credit
under subsection (a)(1) may not be made for any taxable year if
such an election (by the taxpayer or any other individual) is
in effect with respect to such student for any 2 prior taxable
years.
(B) Credit allowed for year only if individual is at least 1/2
time student for portion of year
The Hope Scholarship Credit under subsection (a)(1) shall not
be allowed for a taxable year with respect to the qualified
tuition and related expenses of an individual unless such
individual is an eligible student for at least one academic
period which begins during such year.
(C) Credit allowed only for first 2 years of postsecondary
education
The Hope Scholarship Credit under subsection (a)(1) shall not
be allowed for a taxable year with respect to the qualified
tuition and related expenses of an eligible student if the
student has completed (before the beginning of such taxable
year) the first 2 years of postsecondary education at an
eligible educational institution.
(D) Denial of credit if student convicted of a felony drug
offense
The Hope Scholarship Credit under subsection (a)(1) shall not
be allowed for qualified tuition and related expenses for the
enrollment or attendance of a student for any academic period
if such student has been convicted of a Federal or State felony
offense consisting of the possession or distribution of a
controlled substance before the end of the taxable year with or
within which such period ends.
(3) Eligible student
For purposes of this subsection, the term ''eligible student''
means, with respect to any academic period, a student who -
(A) meets the requirements of section 484(a)(1) of the Higher
Education Act of 1965 (20 U.S.C. 1091(a)(1)), as in effect on
the date of the enactment of this section, and
(B) is carrying at least 1/2 the normal full-time work load
for the course of study the student is pursuing.
(4) Applicable limit
For purposes of paragraph (1)(B), the applicable limit for any
taxable year is an amount equal to 2 times the dollar amount in
effect under paragraph (1)(A) for such taxable year.
(c) Lifetime Learning Credit
(1) Per taxpayer credit
The Lifetime Learning Credit for any taxpayer for any taxable
year is an amount equal to 20 percent of so much of the qualified
tuition and related expenses paid by the taxpayer during the
taxable year (for education furnished during any academic period
beginning in such taxable year) as does not exceed $10,000
($5,000 in the case of taxable years beginning before January 1,
2003).
(2) Special rules for determining expenses
(A) Coordination with Hope Scholarship
The qualified tuition and related expenses with respect to an
individual who is an eligible student for whom a Hope
Scholarship Credit under subsection (a)(1) is allowed for the
taxable year shall not be taken into account under this
subsection.
(B) Expenses eligible for Lifetime Learning Credit
For purposes of paragraph (1), qualified tuition and related
expenses shall include expenses described in subsection (f)(1)
with respect to any course of instruction at an eligible
educational institution to acquire or improve job skills of the
individual.
(d) Limitation based on modified adjusted gross income
(1) In general
The amount which would (but for this subsection) be taken into
account under subsection (a) for the taxable year shall be
reduced (but not below zero) by the amount determined under
paragraph (2).
(2) Amount of reduction
The amount determined under this paragraph is the amount which
bears the same ratio to the amount which would be so taken into
account as -
(A) the excess of -
(i) the taxpayer's modified adjusted gross income for such
taxable year, over
(ii) $40,000 ($80,000 in the case of a joint return), bears
to
(B) $10,000 ($20,000 in the case of a joint return).
(3) Modified adjusted gross income
The term ''modified adjusted gross income'' means the adjusted
gross income of the taxpayer for the taxable year increased by
any amount excluded from gross income under section 911, 931, or
933.
(e) Election not to have section apply
A taxpayer may elect not to have this section apply with respect
to the qualified tuition and related expenses of an individual for
any taxable year.
(f) Definitions
For purposes of this section -
(1) Qualified tuition and related expenses
(A) In general
The term ''qualified tuition and related expenses'' means
tuition and fees required for the enrollment or attendance of -
(i) the taxpayer,
(ii) the taxpayer's spouse, or
(iii) any dependent of the taxpayer with respect to whom
the taxpayer is allowed a deduction under section 151,
at an eligible educational institution for courses of
instruction of such individual at such institution.
(B) Exception for education involving sports, etc.
Such term does not include expenses with respect to any
course or other education involving sports, games, or hobbies,
unless such course or other education is part of the
individual's degree program.
(C) Exception for nonacademic fees
Such term does not include student activity fees, athletic
fees, insurance expenses, or other expenses unrelated to an
individual's academic course of instruction.
(2) Eligible educational institution
The term ''eligible educational institution'' means an
institution -
(A) which is described in section 481 of the Higher Education
Act of 1965 (20 U.S.C. 1088), as in effect on the date of the
enactment of this section, and
(B) which is eligible to participate in a program under title
IV of such Act.
(g) Special rules
(1) Identification requirement
No credit shall be allowed under subsection (a) to a taxpayer
with respect to the qualified tuition and related expenses of an
individual unless the taxpayer includes the name and taxpayer
identification number of such individual on the return of tax for
the taxable year.
(2) Adjustment for certain scholarships, etc.
The amount of qualified tuition and related expenses otherwise
taken into account under subsection (a) with respect to an
individual for an academic period shall be reduced (before the
application of subsections (b), (c), and (d)) by the sum of any
amounts paid for the benefit of such individual which are
allocable to such period as -
(A) a qualified scholarship which is excludable from gross
income under section 117,
(B) an educational assistance allowance under chapter 30, 31,
32, 34, or 35 of title 38, United States Code, or under chapter
1606 of title 10, United States Code, and
(C) a payment (other than a gift, bequest, devise, or
inheritance within the meaning of section 102(a)) for such
individual's educational expenses, or attributable to such
individual's enrollment at an eligible educational institution,
which is excludable from gross income under any law of the
United States.
(3) Treatment of expenses paid by dependent
If a deduction under section 151 with respect to an individual
is allowed to another taxpayer for a taxable year beginning in
the calendar year in which such individual's taxable year begins
-
(A) no credit shall be allowed under subsection (a) to such
individual for such individual's taxable year, and
(B) qualified tuition and related expenses paid by such
individual during such individual's taxable year shall be
treated for purposes of this section as paid by such other
taxpayer.
(4) Treatment of certain prepayments
If qualified tuition and related expenses are paid by the
taxpayer during a taxable year for an academic period which
begins during the first 3 months following such taxable year,
such academic period shall be treated for purposes of this
section as beginning during such taxable year.
(5) Denial of double benefit
No credit shall be allowed under this section for any expense
for which a deduction is allowed under any other provision of
this chapter.
(6) No credit for married individuals filing separate returns
If the taxpayer is a married individual (within the meaning of
section 7703), this section shall apply only if the taxpayer and
the taxpayer's spouse file a joint return for the taxable year.
(7) Nonresident aliens
If the taxpayer is a nonresident alien individual for any
portion of the taxable year, this section shall apply only if
such individual is treated as a resident alien of the United
States for purposes of this chapter by reason of an election
under subsection (g) or (h) of section 6013.
(h) Inflation adjustments
(1) Dollar limitation on amount of credit
(A) In general
In the case of a taxable year beginning after 2001, each of
the $1,000 amounts under subsection (b)(1) shall be increased
by an amount equal to -
(i) such dollar amount, multiplied by
(ii) the cost-of-living adjustment determined under section
1(f)(3) for the calendar year in which the taxable year
begins, determined by substituting ''calendar year 2000'' for
''calendar year 1992'' in subparagraph (B) thereof.
(B) Rounding
If any amount as adjusted under subparagraph (A) is not a
multiple of $100, such amount shall be rounded to the next
lowest multiple of $100.
(2) Income limits
(A) In general
In the case of a taxable year beginning after 2001, the
$40,000 and $80,000 amounts in subsection (d)(2) shall each be
increased by an amount equal to -
(i) such dollar amount, multiplied by
(ii) the cost-of-living adjustment determined under section
1(f)(3) for the calendar year in which the taxable year
begins, determined by substituting ''calendar year 2000'' for
''calendar year 1992'' in subparagraph (B) thereof.
(B) Rounding
If any amount as adjusted under subparagraph (A) is not a
multiple of $1,000, such amount shall be rounded to the next
lowest multiple of $1,000.
(i) Regulations
The Secretary may prescribe such regulations as may be necessary
or appropriate to carry out this section, including regulations
providing for a recapture of the credit allowed under this section
in cases where there is a refund in a subsequent taxable year of
any amount which was taken into account in determining the amount
of such credit.
Sources
(Added Pub. L. 105-34, title II, Sec. 201(a), Aug. 5, 1997, 111
Stat. 799; amended Pub. L. 107-16, title IV, Sec. 401(g)(2)(A),
June 7, 2001, 115 Stat. 59.)
Amendment of Section
INFLATION ADJUSTED ITEMS FOR TAX YEARS BEGINNING IN 2002
For inflation adjustment of amounts in subsection (b)(1) of
this section used in determining Hope Scholarship Credit and
amounts in subsection (d)(2)(A)(ii) of this section used in
determining reduction in amount of credits otherwise allowable
for tax years beginning in 2002, see section 3.04 of Revenue
Procedure 2001-59, set out as a note under section 1 of this
title.
AMENDMENT OF SECTION
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note below.
References in Text
REFERENCES IN TEXT
The date of the enactment of this section, referred to in
subsecs. (b)(3)(A) and (f)(2)(A), is the date of enactment of Pub.
L. 105-34 which was approved Aug. 5, 1997.
The Higher Education Act of 1965, referred to in subsec.
(f)(2)(B), is Pub. L. 89-329, Nov. 8, 1965, 79 Stat. 1219, as
amended. Title IV of the Act is classified generally to subchapter
IV (Sec. 1070 et seq.) of chapter 28 of Title 20, Education, and
part C (Sec. 2751 et seq.) of subchapter I of chapter 34 of Title
42, The Public Health and Welfare. For complete classification of
this Act to the Code, see Short Title note set out under section
1001 of Title 20 and Tables.
Miscellaneous
AMENDMENTS
2001 - Subsec. (e). Pub. L. 107-16, Sec. 401(g)(2)(A), 901,
temporarily amended heading and text of subsec. (e) generally.
Prior to amendment, text read as follows:
''(1) In general. - No credit shall be allowed under subsection
(a) for a taxable year with respect to the qualified tuition and
related expenses of an individual unless the taxpayer elects to
have this section apply with respect to such individual for such
year.
''(2) Coordination with exclusions. - An election under this
subsection shall not take effect with respect to an individual for
any taxable year if any portion of any distribution during such
taxable year from an education individual retirement account is
excluded from gross income under section 530(d)(2).''
See Effective and Termination Dates of 2001 Amendment note below.
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
Pub. L. 107-16, title IV, Sec. 401(h), June 7, 2001, 115 Stat.
60, provided that: ''The amendments made by this section (amending
this section and sections 135, 530, and 4973 of this title) shall
apply to taxable years beginning after December 31, 2001.''
Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or
limitation years beginning after Dec. 31, 2010, and the Internal
Revenue Code of 1986 to be applied and administered to such years
as if such amendment had never been enacted, see section 901 of
Pub. L. 107-16, set out as a note under section 1 of this title.
EFFECTIVE DATE
Section 201(f) of Pub. L. 105-34 provided that:
''(1) In general. - The amendments made by this section (enacting
this section and section 6050S of this title and amending sections
135, 6213, and 6724 of this title) shall apply to expenses paid
after December 31, 1997 (in taxable years ending after such date),
for education furnished in academic periods beginning after such
date.
''(2) Lifetime learning credit. - Section 25A(a)(2) of the
Internal Revenue Code of 1986 shall apply to expenses paid after
June 30, 1998 (in taxable years ending after such date), for
education furnished in academic periods beginning after such
dates.''
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 72, 135, 221, 222, 529,
530, 6050S, 6213 of this title; title 20 sections 1087oo, 1087pp,
1087qq, 1087ss, 1087vv.
