1098T Tuition Statement Information
TAX BENEFITS FOR EDUCATION
Several tax benefits are available to help families meet the cost of postsecondary education. Two of those benefits are tax credits known as the Lifetime Learning Credit or the American Opportunity Credit. These tax credits directly reduce the amount of federal income tax owed. In addition, an “above the line” deduction provides some relief for families whose income is too high to qualify for the tax credits. Education expense paid for with tax-free grants and scholarships are not eligible for the credits or deduction, however education expenses paid with loans are eligible.
LIFETIME LEARNING CREDIT (See IRS Form 8863)
The Lifetime Learning Credit is for qualified tuition and related expenses paid for eligible students enrolled in an eligible educational institution. This credit can help pay for undergraduate, graduate and professional degree courses - including courses to acquire or improve job skills. There is no limit on the number of years you can claim the credit. It is worth up to $2,000 per tax return.
AMERICAN OPPORTUNITY CREDIT (See IRS Form 8863)
American Opportunity Tax Credit is a credit for qualified education expenses paid for an eligible student for the first four years of higher education. You can get a maximum annual credit of $2,500 per eligible student. If the credit brings the amount of tax you owe to zero, you can have 40% of any remaining amount of the credit (up to $1,000) refunded to you.
|Comparison of Education Credits|
|American Opportunity Credit||Lifetime Learning Credit|
|Maximum credit||Up to $2,500 credit per eligible student||Up to $2,000 credit per return|
|Limit on modified adjusted gross income (MAGI)||$180,000 if married filling jointly;
$90,000 if single, head of household, or qualifying widow(er)
|$128,000 if married filing jointly;
$64,000 if single, head of household, or qualifying widow(er)
|Refundable or nonrefundable||40% of credit may be refundable; the rest is nonrefundable||Nonrefundable - credit limited to the amount of tax you must pay on your taxable income|
|Number of years of postsecondary education||Available ONLY if the student had not completed the first 4 years of postsecondary education before 2014||Available for all years of postsecondary education and for courses to acquire or improve job skills|
|Number of tax years credit available||Available ONLY for 4 tax years per eligible student (including any year(s) Hope credit was claimed)||Available for an unlimited number of tax years|
|Type of program required||Student must be pursuing a program leading to a degree or other recognized education credential||Student does not need to be pursuing a program leading to a degree or other recognized education credential|
|Number of courses||Student must be enrolled at least half time for at least one academic period beginning during 2014 (or the first 3 months of 2015 if the qualified expenses were paid in 2014)||Available for one or more courses|
|Felony drug conviction||As of the end of 2014, the student had not been convicted of a felony for possessing or distributing a controlled substance||Felony drug convictions do not make the student ineligible|
|Qualified expenses||Tuition, required enrollment fees and course materials that the student needs for a course of study whether or not the materials are bought at the educational institution as a condition of enrollment or attendance.||Tuition and required enrollment fees (including amounts required to be paid to the institution for course-related books, supplies, and equipment).|
|Payments for academic periods||Payments made in 2016 for academic periods beginning in 2016 and in the first 3 months of 2017.|
TUITION AND FEES DEDUCTION (See IRS Form 8917)
You may be able to deduct qualified education expenses paid during the year for yourself, your spouse or your dependent. You cannot claim this deduction if your filing status is married filing separately or if another person can claim an exemption for you as a dependent on his or her tax return.
The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000.
This deduction is taken as an adjustment to income. This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040). This deduction may be beneficial to you if you cannot take either the Hope or lifetime learning credit because your income is too high.
WHO IS ELIGIBLE FOR THE EDUCATION BENEFITS?
The American Opportunity Credit is available to married taxpayers filing jointly with a modified adjusted gross income (MAGI) of less than $180,000 or $90,000 if filing as single, head of household, or qualifying widow(er). The Lifetime Learning Credits are available to married taxpayers filing jointly with a modified adjusted gross income (MAGI) of less than $120,000 or $60,000 filing as single, head of household, or qualifying widow(er). Taxpayers cannot use more than one credit for the same student in a single year. You are not eligible for the credit or deduction if you (or your spouse) were nonresident aliens for any part of 2011 and the nonresident alien did not elect to be treated as a resident alien for tax purposes.
After the end of each tax year, the University is required to file Form 1098-T (Tuition Statement) with the IRS and each student. Form 1098-T will indicate whether the student was enrolled at least half time for at least one academic term during the tax year, and whether the student was enrolled exclusively in graduate level courses. Also included on Form 1098-T, are the amounts billed for qualified tuition and related expenses during the calendar year.
This information is not intended as legal or tax advice and is not an exhaustive listing of all available tax benefits for education or the criteria for those credits. Individuals should consult the forms and publications found on the IRS website, or contact a tax practitioner about personal income tax situations.