§ 1.25A-0. Table of contents.

§ 1.25A-1 Calculation of Education Tax Credit and General Eligibility Requirements

(a) Amount of education tax credit.

(b) Coordination of Hope Scholarship Credit and Lifetime Learning Credit.

(1) In general.

(2) Hope Scholarship Credit.

(3) Lifetime Learning Credit.

(4) Examples.

(c) Limitation based on modified adjusted gross income.

(1) In general.

(2) Modified adjusted gross income defined.

(3) Inflation adjustment.

(d) Election.

(e) Identification requirement.

(f) Claiming the credit in the case of a dependent.

(1) In general.

(2) Examples.

(g) Married taxpayers.

(h) Nonresident alien taxpayers and dependents.

§ 1.25A-2 Definitions

(a) Claimed dependent.

(b) Eligible educational institution.

(1) In general.

(2) Rules on Federal financial aid programs.

(c) Academic period.

(d) Qualified tuition and related expenses.

(1) In general.

(2) Required fees.

(i) In general.

(ii) Books, supplies, and equipment.

(iii) Nonacademic fees.

(3) Personal expenses.

(4) Treatment of a comprehensive or bundled fee.

(5) Hobby courses.

(6) Examples.

§ 1.25A-3 Hope Scholarship Credit

(a) Amount of the credit.

(1) In general.

(2) Maximum credit.

(b) Per student credit.

(1) In general.

(2) Example.

(c) Credit allowed for only two taxable years.

(d) Eligible student.

(1) Eligible student defined.

(i) Degree requirement.

(ii) Work load requirement.

(iii) Year of study requirement.

(iv) No felony drug conviction.

(2) Examples.

(e) Academic period for prepayments.

(1) In general.

(2) Example.

(f) Effective date.

§ 1.25A-4 Lifetime Learning Credit

(a) Amount of the credit.

(1) Taxable years beginning before January 1, 2003.

(2) Taxable years beginning after December 31, 2002.

(3) Coordination with the Hope Scholarship Credit.

(4) Examples.

(b) Credit allowed for unlimited number of taxable years.

(c) Both degree and nondegree courses are eligible for the credit.

(1) In general.

(2) Examples.

(d) Effective date.

§ 1.25A-5 Special Rules Relating to Characterization and Timing of Payments

(a) Educational expenses paid by claimed dependent.

(b) Educational expenses paid by a third party.

(1) In general.

(2) Special rule for tuition reduction included in gross income of employee.

(3) Examples.

(c) Adjustment to qualified tuition and related expenses for certain excludable educational assistance.

(1) In general.

(2) No adjustment for excludable educational assistance attributable to expenses paid in a prior year.

(3) Scholarships and fellowship grants.

(4) Examples.

(d) No double benefit.

(e) Timing rules.

(1) In general.

(2) Prepayment rule.

(i) In general.

(ii) Example.

(3) Expenses paid with loan proceeds.

(4) Expenses paid through third party installment payment plans.

(i) In general.

(ii) Example.

(f) Refund of qualified tuition and related expenses.

(1) Payment and refund of qualified tuition and related expenses in the same taxable year.

(2) Payment of qualified tuition and related expenses in one taxable year and refund in subsequent taxable year before return filed for prior taxable year.

(3) Payment of qualified tuition and related expenses in one taxable year and refund in subsequent taxable year.

(i) In general.

(ii) Recapture amount.

(4) Refund of loan proceeds treated as refund of qualified tuition and related expenses.

(5) Excludable educational assistance received in a subsequent taxable year treated as a refund.

(6) Examples.