As of the beginning of the tax year, the student must not have completed the first two years of post-secondary education. Even if Dependent Surprisingly, the regs provide that if a taxpayer is eligible but does not claim a student as a dependent, the student can claim the education credit for the student's qualified tuition and related expenses. This will be a trade off because the student will not be able to claim himself as a dependent. However, some parents may lose most or all of the benefit of the dependency exemption anyway due to the phaseout. Affected parents will want to ensure that their children have enough income to obtain the maximum allowable credit.
Many students receive college credits as a result of their performance on proficiency examinations.
For purposes of determining a student's class standing, which is used to determine eligibility for the Hope Credit, academic credit awarded as a result of a proficiency examination will not be taken into account. This means that some student who are treated as juniors by the educational institution will be treated as sophomores for purposes of the Hope Scholarship Credit and will be eligible for the credit. The proposed regs provide that, if qualified tuition and related expenses are paid during a tax year to cover an academic period that begins during the first three months of the taxpayer's next tax year, an education credit would be allowed only in the tax year in which the expenses are paid. Eligibility Determination Eligibility for the Hope scholarship credit will be determined as of the beginning of the tax year. For example, if a student is a sophomore at the beginning of a calendar year and after completing the winter, spring or fall term becomes a junior, all qualified tuition and related expenses paid during the entire year would be eligible for the Hope credit.