Taxpayer Relief Act of 1997
Are You Eligible for Education Tax Credits?
The Taxpayer Relief Act of 1997 (TRA97) contains provisions for two new education tax credits, the Hope Scholarship and the Lifetime Learning Credit. The intent of these tax credits is to enhance educational opportunities by making higher education more affordable through tax benefits for certain students.
The Hope Scholarship applies to the first two years of college (or other eligible post-secondary training). Taxpayers will be eligible for a tax credit equal to 100% of the first $1,000 of tuition and fees and 50% of the second $1,000, for a maximum credit of $1,500. The credit will be available on a per-student basis for net tuition and fees paid for college enrollment after December 31, 1997. The credit will be phased out for joint filers between $80,000 and $100,000 of income, and for single filers between $40,000 and $50,000. The credit can be claimed in two taxable years with respect to any individual enrolled on at least a half-time basis for any portion of the year.
The Lifetime Learning Credit picks up where the Hope Scholarship leaves off. For those beyond the first two years of college, or taking classes part-time to improve or upgrade their job skills, the family will receive a 20% tax credit for the first $5,000 of tuition and fees through 2002, and for the first $10,000 thereafter. The credit is available for net tuition and fees paid for post-secondary enrollment after June 30, 1998. The credit is available on a per-taxpayer (family) basis, and is phased out at the same income levels as the Hope Scholarship.
A new document, the 1098-T, will be provided for each qualifying student enrolled at UNCG. Since the Internal Revenue Service has not made a final determination on what constitutes qualified fees, UNCG is not required to report amounts for qualified tuition and fees. Instead, a summary of student account activity for each tax year will be included with the 1098-T. Please bear in mind that receipt of the 1098-T does not indicate eligibility for the tax credits. It is only a summary of student account activity. Eligibility is based on each individual's tax situation.
FORM 1098-T
(Tuition Payments Statement)
Form 1098-T does not include information regarding the amount of qualified tuition and fees paid by you or on your behalf; however, you must identify those amounts in order to determine eligibility for the educational tax credits. We have prepared a summary statement of student account activity for each tax year so that you may easily evaluate your eligibility for these educational tax credits.
If you qualify for any credits, you may choose to calculate any applicable credit and disclose that amount on your Form 1040 (U. S. Individual Income Tax Return). These tax credits are claimed using Form 8633 (Education Credits (Hope and Lifetime Learning Credits).
Because this is the first year for which the educational tax credits are available, there will no doubt be confusion about who qualifies for the credit and how to claim the credit if you qualify. To assist you, we have also included some of the more frequently asked questions regarding Form 1098-T and the Hope Scholarship and Lifetime Learning credits.
At this point, The University of North Carolina at Greensboro is able to provide you with information about your Form 1098-T. If you find that the name and/or social security number reported on Form 1098-T (Tuition Payments Statement) is incorrect, and/or if you have questions concerning either the Form 1098-T or the summary statement, please contact the University Cashiers & Student Accounts Office at (336) 334-5831. If you would prefer to send your questions via email, the address is 1098T@uncg.edu.
Questions & Answers
What is Form 1098-T (Tuition Payments Statement)?
Form 1098-T (Tuition Payments Statement) will be sent to students at UNCG who paid, or for whom a third party paid on their behalf, tuition and fees during each tax year beginning January 1, 1998. This is the year in which the Internal Revenue Service has required that Form 1098-T (Tuition Payments Statement) begin to be furnished to you.
Who prepared Form 1098-T (Tuition Payments Statement)?
The information on Form 1098-T (Tuition Payments Statement) will be prepared by UNCG based on information available in the Banner Student Information System.
Why did I receive Form 1098-T (Tuition Payments Statement)?
This form is being sent to all students taking credit courses at UNCG during each tax year, regardless of whether they are eligible for a tax credit. Form 1098-T (Tuition Payments Statement) will be provided to assist in determining if you, or the person who may claim you as a dependent, are eligible to claim an income tax credit on your income tax return. UNCG is required to issue a Form 1098-T by the IRS.
What is the Hope Scholarship Credit?
As of January 1, 1998, undergraduate students in their first two years of higher education who are enrolled at least half-time may be eligible for an income tax credit of up to $1,500 for tuition and fees paid for the first two years of post-secondary education. If you may be claimed as a dependent, then the person providing your financial support may be eligible to claim the credit.
What is the Lifetime Learning Credit?
After July 1, 1998, all (i) part-time students, (ii) full-time junior and senior undergraduate students, and (iii) graduate students may be eligible for an income tax credit of up to 20 percent of the first $5,000 of tuition and fees paid. If the student may be claimed as a dependent, then the person providing the student's support may claim the credit.
If I receive Form 1098-T, do I qualify for the Hope Scholarship or Lifetime Learning Credits?
No. UNCG is required to provide Form 1098-T to individuals for whom qualified tuition and fee payments were received during the calendar year. Eligibility to claim either the Hope Scholarship or Lifetime Learning Tax Credits are based on each individual's tax situation. For more information on your eligibility, please refer to IRS Publication 970 (Tax Benefits for Higher Education).
Is it possible to qualify for both the Hope Scholarship and Lifetime Learning Tax Credits?
Yes. A student may qualify for both the Hope Scholarship and Lifetime Learning Tax Credits at the same time. However, the qualifying expenses are the basis for claiming either the Hope Scholarship or the Lifetime Learning Tax Credit, but not both. In general, students who qualify for both the Hope Scholarship and Lifetime Learning Tax Credits may find the Hope Scholarship Credit to be more beneficial. However, any decision (i) whether an individual qualifies for either credit, (ii) which credit may be more beneficial, is based on each individual's tax situation.
If I am a non-resident alien, will I receive a Form 1098-T?
A non-resident alien should not receive Form 1098-T because a nonresident alien is not generally eligible to claim either the Hope Scholarship or Lifetime Learning Tax Credit. Certain non-resident aliens who are married to U.S. citizens or permanent resident aliens and who qualify to file a joint-income tax return, may, in some cases, qualify to claim the credits. Also, foreign students from Barbados, Hungary, and Jamaica, who qualify for and elect to be treated as resident aliens for U.S. tax purposes by virtue of an income tax treaty, may be eligible to claim the credits.
The University of North Carolina at Greensboro is not in the position to be able to provide you with tax advice or assistance in determining whether you are eligible to claim a credit or the amount of the credit. For assistance in the preparation of your income tax return, please contact a tax professional or refer to IRS Publication 970 (Tax Benefits for Higher Education).
How do I determine which expenses will qualify for the Hope Scholarship and Lifetime Learning Tax Credits?
In an effort to provide you with information you may need to calculate eligible education tax credits, UNCG will enclose the Student Transaction Summary Report for each tax year. The information provided on this statement is simply a record of the total payments received from you or on your behalf, as well as the total amount of certain expenses charged to your student account at UNCG. Each individual must determine which, if any, of these amounts may be used in the calculation of the educational tax credits. Generally, only qualified tuition and fees are eligible. The term qualified tuition and fees means the amounts paid for tuition and fees required to be paid by an individual in order to be enrolled at or attend an eligible institution. Please note that any amounts paid for education with respect to sports, games, or hobbies will not generally be considered eligible unless a part of the student's degree program.
What if the information reported on Form 1098-T (Tuition Payments Statement) is incorrect?
If you find that the name and/or social security number reported on Form 1098-T (Tuition Payments Statement) is incorrect, and/or if you have questions concerning either the Form 1098-T or the summary statement, please contact the University Cashiers & Student Accounts Office at (336) 334-5831. If you would prefer to send your questions via email, the address is 1098T@uncg.edu.
Where can I get more information?
To determine whether you, or the person who may claim you as a dependent, are eligible to claim either the Hope Scholarship Credit or the Lifetime Learning Credit, please contact a tax professional or refer to IRS Publication 970 (Tax Benefits for Higher Education). Also, you may contact the IRS through their taxpayer assistance number at (800) 829-1040 or the IRS web site at www.irs.ustreas.gov.