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WHAT IS IRS FORM 1098-T?
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IRS Form 1098-T --
A college or university that received qualified tuition and related expenses on your behalf is required to file Form 1098-T, above, with the Internal Revenue Service (IRS). A copy of Form 1098-T must be furnished to you. The information being reported to the IRS verifies your enrollment with regard to certain eligibility criteria for the Hope Tax Credit, the Lifetime Learning Tax Credit and the new deduction for higher education expenses. However, the enrollment information by itself does not establish eligibility for either credit or the new deduction.
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- Boxes 1, 2, 3, 4, 5, 6 and 7. The reporting institution is not required to provide information in boxes 1 through 7 for tax year 2002.
- Box 8. Shows whether this college or university considers you to have carried at least one-half the normal full-time workload for your course of study for an academic term during the 2002 calendar year. If you were enrolled at least half-time for at least one academic term during 2002, you meet one of the requirements for the Hope Tax Credit. You do not have to be a half-time student to qualify for the Lifetime Learning Tax Credit or the new deduction for higher education expenses.
- Box 9. Shows whether this college or university considers you to have been enrolled in a program leading to a graduate degree, graduate-level certificate, or other recognized graduate-level educational credential during the 2002 calendar year. If you were enrolled in a graduate program, you are not eligible for the Hope Tax Credit, but you may qualify for the Lifetime Learning Tax Credit or the new deduction for higher education expenses.
Please refer to IRS Publications listed under "Resources" below for complete explanations of eligibility requirements.
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| BACKGROUND INFORMATION
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The Taxpayer Relief Act of 1997 (TRA97) established two new education tax credits: the Hope Tax Credit for students who are enrolled in one of the first two years of postsecondary education and are carrying at least a half-time workload while pursuing an undergraduate degree, certificate, or other recognized credential; and the Lifetime Learning Tax Credit for students who take one or more classes from a college or university to pursue an undergraduate or graduate degree, certificate, other recognized credential, or to acquire or improve job skills. The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) established a new "above the line" deduction for qualified higher education expenses for students who have a Modified Adjusted Gross income that exceeds the defined thresholds for the tax credits. Additional information about the Hope and Lifetime Learning Tax Credits and the new deduction for higher education expenses is provided in the informational brochure enclosed with this form.
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To claim the Hope or Lifetime Learning Tax Credit, use IRS Form 8863, Education Credits.
To claim the new deduction for higher education expenses, no additional forms are required nor is it necessary to file an itemized federal income tax return. The deduction is claimed on Line 19 on IRS Form 1040A, or Line 26 on IRS Form 1040.
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Additional requirements and conditions apply, including income ceilings on eligibility and possible reductions to the amount of qualified education expenses that can be claimed. A taxpayer may not be able to claim an education tax credit or deduction under Internal Revenue Code Section 25A and the regulations thereunder with respect to the total payments of qualified tuition and related expenses. The amount of any scholarships, grants, reimbursements, or refunds received by or on behalf of the student during the calendar year may reduce the amount of any allowable education tax benefit.
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If you are claimed as a dependent by another person [including your parent(s)], you cannot claim the Hope Tax Credit, Lifetime Learning Tax Credit, or tax deduction for higher education expenses. However, the person claiming you may be entitled to the credit on his or her tax return.
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Resources
For more information about these credits and the new deduction for higher education expenses see IRS Publication 970: Tax Benefits for Higher Education; IRS Notice 97-60: provides consumer guidance on Education Tax Incentives; and IRS Publication 520: Scholarships and Fellowships. These documents, as well as IRS Form 8863, are available at www.irs.treas.gov or by calling the IRS at 1-800-829-1040. Additional instructions from your school, along with this 1098-T, IRS Form 8863, and general information on TRA97 and EGTRRA are also available on www.1098-T.com.
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