I am an H1B visa holder. During 2008 my wife (H4 visa holder from Jan-Dec 2009, and F1 from Dec - present) attended a college and I paid over $10,500 for this (I have the form 1098-T).

1) Can I apply for education credit (Hope Credit) using Form 8863. If I can, this would allow me a tax credit.

2) If the answer is No to #1, then can I apply for tuition and fees deduction. This would lower my taxable income by a bit.

Thanks,

You can file joint return as residents and claim tuition and fee deduction or education credit.
If you file joint return, your spouse must start paying FICA taxes on her income in 2010.