Kentucky Education Tuition Tax Credit
Kentucky offers the Hope Credit and the Lifetime Learning Credit. These credits are based on qualified education expenses paid to an eligible postsecondary educational institution located in Kentucky. If you elected to claim the education credit for federal purposes rather than the tuition and fees deductions, you must make the same election for Kentucky purposes.
Caution: Requirements for the 2011 Kentucky Education Tuition Tax Credit are different from the federal education requirements due to Kentucky not adopting the American Recovery and Reinvestment Act of 2009.
Qualified Education Expenses
Generally, qualified education expenses are amounts paid in 2011 for tuition and fees required for the student’s enrollment or attendance at an eligible educational institution. It does not matter whether the expenses were paid in cash, by check, by credit card, or with borrowed funds.
Eligible Educational Institution located in Kentucky
An eligible educational institution is generally any accredited public, nonprofit, or private college, university, vocational school, or other postsecondary institution. Also, the institution must be eligible to participate in a student aid program administered by the Department of Education. The institution must also be physically located in Kentucky to qualify.
You may be able to take a credit of up to 25% of $1,800 for qualified education expenses paid for each student who qualifies for the Hope Credit. The Hope Credit equals 100% of the first $1,200 and 50% of the next $1,200 of qualified expenses paid for each eligible student. For Kentucky, the credit is then limited to 25% for a maximum amount allowed of $450 for each student who qualified. You can take the Hope Credit for a student if all of the following apply.
- As of the beginning of 2011, the student had not completed the first 2 years of postsecondary education (generally, the freshman and sophomore years of college), as determined by the eligible educational institution. For this purpose, do not include academic credit awarded solely because of the student’s performance on proficiency exams.
- The student was enrolled in 2011 in a program that leads to a degree, certificate, or other recognized educational credential.
- The student was taking at least one-half the normal fulltime workload for his or her course of study for a least one academic period beginning in 2011.
- The Hope Credit was not claimed for that student’s expenses in more than one prior tax year.
- The student has not been convicted of a felony for possessing or distributing a controlled substance.
Note: If a student does not meet all of the above qualifications, you may be able to take the Lifetime Learning Credit for part or all of the student’s qualified education expenses.
Lifetime Learning Credit
You may be able to take 25% of the Lifetime Learning Credit that equals 20% of qualified expenses paid, up to a maximum of $10,000 of qualified expenses per return. The maximum amount of Lifetime Learning Credit you can claim on your tax return for the tax year is $2,000. For Kentucky, the Lifetime Learning Credit is then limited to 25% of the $2,000 for a maximum allowed of $500 per return.
Allowable Education Credits
You cannot take any Kentucky Education Credits if your federal adjusted gross income (federal Form 1040, Line 37 or 1040A, Line 21) exceeds $122,000 if married, filing jointly or married, filing separately on a combined return ($61,000 if single). If you are filing a separate return, you do not qualify for this credit. If your income is greater than $100,000, you may only be entitled to a portion of the credits, if any.
Credit Carryforward from Prior Years
The Kentucky Education Tax credit can be carried forward for up to 5 years if unused during the preceding tax year(s). You must have completed Form 8863-K for any prior year in which you are claiming a credit carryforward.