HOPE Scholarship and Lifetime Learning Credits
Taxpayer Relief Act of 1997 (TRA-97)
The Taxpayer Relief Act of 1997 (TRA-97), passed by the United States Congress in August of 1997, includes provisions designed to assist families with paying and saving for college. The major educational provisions of the legislation include tax credits for college costs and tax-sheltered education savings accounts. Lincoln University believes this is an outstanding opportunity for our students to save money when paying for the costs of their education.
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For a student to receive the Hope Tax Credit, he/she must have been enrolled at least half time in a degree program, or other program that leads to a recognized certificate, during the tax year. The credit may only be claimed for the first two years of postsecondary education and may be claimed only in two tax years. Students are ineligible to receive the credit if they have been convicted of a federal or state drug offense.
Payments for eligible educational expenses must have been made for academic periods within the tax year or for an academic period that begins within the first three months of the following year. The credit is calculated as 100 percent of the first $1,000 and 50 percent of the next $1,000 of eligible educational expenses with a maximum of $1,500 per eligible student.
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Unlike the Hope Tax Credit, to be eligible for the Lifetime Learning Credit, it is not necessary for the student to be enrolled at least half time. In addition, the credit can be claimed for students taking non-degree courses that allow a student to be better skilled in the job market.
Payments for eligible educational expenses must have been made for academic periods within the tax year or for an academic period that begins within the first three months of the following year. The credit is calculated as 20 percent of the first $10,000 of educational expenses for eligible students.
Eligible educational expenses for both the Hope and Lifetime Tax Credits include only tuition and other fees required for enrollment at a postsecondary institution and paid to that institution. For Lincoln University, these fees include undergraduate and graduate tuiton, supplemental course fees, application fees, required activity fees and required computing fees. Costs associated with room and board and books are not eligible educational expenses.
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For both the Hope and Lifetime Tax Credits, the amount of the credit may be reduced as the taxpayers income increases beyond certain limits. For further information, you may consult your tax advisor or contact the IRS at (800) TAX-FORM (800-829-3676).
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Interest may be deducted on qualifying loans paid by the taxpayer, the taxpayer's spouse or qualified dependents of the taxpayer. Anyone who is eligible to be claimed as a dependent cannot claim the tax deduction, only the taxpayer claiming him or her may.
Student loan interest paid in the first 60 months of the loan is eligible for the deduction. Periods when a borrower is in authorized deferment do not count toward the 60-month period. The deduction applies to payments made during the calendar year. If the loan already existed at that time, interest payments remain eligible until the initial 60-month period of time has expired on the loan.
Similar to the Hope and Lifetime tax credits, the student loan interest deduction is limited to loans that pay only for qualified educational expenses. The definition for qualified expenses, however, is broader than that of the Hope and Lifetime and includes educational fees, room and board, and books.
The taxpayer may be eligible to deduct an amount equal to the interest paid during the year up to a maximum of $2,500. The deduction is phased out based upon income requirements. For further information, you may consult your tax advisor or contact the IRS at (800) TAX-FORM (800-829-3676).
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Lincoln University is required to provide the student with a Form 1098-T Tuition Payments Statement by February 1 for the prior calendar year.
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It is important to note that Lincoln University cannot provide tax advice. The information in this release should not be construed as tax advice or counsel. Students and taxpayers are encouraged to contact a tax professional for information relating to eligibility for and calculation of the tax incentives.
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http://www.aicpa.org/
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