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The Taxpayer Relief
Act of 1997 has established two tax credits for education expenses
that may be available to some parents. The new credits are: THE HOPE SCHOLARSHIP CREDIT The Hope Scholarship Credit, a tax credit equal to all of the first $1,000 of tuition and fees (less scholarships, grants, and tax-free tuition benefits) and half of the next $1,000 of tuition and fees. This credit is available to parents of dependent students or to students who are not claimed on their parents' tax forms. The Hope credit can be claimed only for the first two years of postsecondary education, and students must be enrolled at least half-time to qualify. Students with felony drug convictions may not claim the credit. THE LIFETIME LEARNING CREDIT The Lifetime Learning Credit, which applies to tuition and fees for undergraduate, graduate, and continuing education course work. A family can claim on its tax return a credit equal to 20 percent of $5,000 of educational expenses, which means a maximum benefit of $1,000 each tax year. Any scholarships, grants, and tax-free tuition benefits the student receives must be subtracted from total educational expenses used for the credit. Married taxpayers filing jointly must have an adjusted gross income (AGI) of $80,000 or less; single taxpayers must have an AGI of $40,000 or less. Above those limits, credits phase out gradually, and once married taxpayers' AGI exceeds $100,000 or single taxpayers' AGI is over $50,000, they are not eligible. "We urge parents to see their tax advisers about these credits," says Marty Miller, University cashier. "We cannot tell parents whether they can or cannot take these exemptions because we don't know the taxpayer's full financial picture. "We're referring callers to the Internal Revenue Service web site (http:www.irs.ustreas.gov). We also recommend a brochure by nine college and university professional groups, sponsored by TIAA-CREF, called 'New Tax & Saving Options for Education.'" IRS Publication 970, "Tax Benefits for Higher Education," also lists requirements. The University must report to the IRS each year on Form 1098T the amount of tuition each student paid and whether the student was enrolled at least half-time, Miller says. A copy of the form will be sent to the student's designated address. "If parents don't receive a copy of that 1098T form from their students and hope to take the credit, the student may contact the Cashier's Office if the form has been lost," he says. |
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