Frequently Asked Questions About Eligibility for Education Tax Credits


Since I received a 1098-T, am I therefore eligible for a tax credit?
How do I know if I am eligible for an education tax credit?
I was a sophomore in the Spring and a Junior in the Fall.  Which education tax credit should I claim?
I received a lot of financial aid.  Am I eligible to claim an education tax credit?
I am an international student.  Am I eligible for an education tax credit?
I took a course through University Extension.  Am I eligible for an education tax credit?
I want to claim an education tax credit, but my parents say they should.  Can we both claim?
I withdrew from the only quarter I attended during the tax year.  Am I eligible for an education tax credit?

The information provided in this web page is NOT tax advice.  It is offered only as general information for UCI students and their families.  Please consult a qualified tax expert for advice on computing, claiming, or determining qualification for any tax benefit mentioned in this web site.


Question:  Since I received a 1098-T, am I therefore eligible for a tax credit?

Answer:  Not necessarily.  The University is required by IRC 6050S to make an information return for any student on whose behalf "qualified education expenses" were paid during the tax year.   Issuing a 1098-T does not constitute a statement or guarantee about a student's eligibility, as additional criteria must be met to claim either the Hope or Lifetime Learning tax credits.

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Question:  How do I know if I am eligible for an education tax credit?

Answer:  IRS Publication 970:   Tax Benefits for Higher Education [download] and Form 8863:  Education Credits [download] are useful resources that contain detailed criteria for eligibility, guidelines for choosing which credit to claim, and instructions for figuring the amount of credit.  IRS Notice 97-60:  Education Tax Incentives [download] contains lengthy sections of frequently asked questions regarding eligibility for the Hope or Lifetime Learning tax credits.

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Question:  I was a sophomore in the Spring and a junior in the Fall.  Which education tax credit should I claim?

Answer:  "Can You Claim the Credit?" for the Hope Credit contains the section "Who is an Eligible Student?" which states that you must not have completed the first two years of postsecondary education to meet eligibility requirements.  The publication also provides a useful flow chart to assist you in quickly deciding whether or not you are eligible for the Hope Credit.  

In contrast, the Lifetime Learning credit is available for any postsecondary education for an unlimited number of years.  This credit is not limited to students in the first two years of postsecondary education.  "Can You Claim the Credit?" for the Lifetime Learning Credit contains the section "Who is an Eligible Student?" which states merely that you must be enrolled in one or more courses at an eligible educational institution.

The University is unable to determine your eligibility or provide guidance for choosing which credit to claim.  You may wish to consult a tax professional, or contact the IRS.

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Question:  I received a lot of financial aid.  Am I eligible to claim an education tax credit?

Answer:  Possibly.  Financial aid potentially diminishes a student's eligibility for an education tax credit by offsetting the amount of "qualified education expenses".  To have this effect, the aid must be classified as "gift aid" (which a student is not required to repay) and as "tax-free educational assistance".   Loans (which a student must repay), work-study earnings (which are taxed), and "gift aid" reported as income (which is taxed) do not reduce the amount of "qualified education expenses".  See "Adjustments to Qualified Expenses" under "What Expenses Qualify,"  for either the Hope or Lifetime Learning credit, in IRS Publication 970:  Tax Benefit for Higher Education [download] for further discussion.

Individual circumstances, such as the taxability of a student's "gift aid", make it impossible for the University to apply a standard formula for determining eligibility.   Furthermore, there are additional criteria for determining eligibility, other than the amount of "gift aid".  Questions about eligibility should be directed to a tax professional or to the IRS.

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Question:  I am an international student.  Am I eligible for an education tax credit?

Answer:   IRS Notice 97-60 [download] states that, in general, nonresident aliens are not eligible for such credits unless their marital status allows them to claim an exception.  Nonresident aliens are instructed to discuss this point with a U.S. tax advisor.

International students who do not have valid Social Security Number (SSN) on file with the University will not receive a 1098-T or supplemental financial information.  IRS Notice 98-59 [download] states that "educational institutions are not required to file information returns for 1998 or 1999 with respect to nonresident alien students, unless requested to do so by the student."  This waiver was extended to tax year 2000 in IRS Notice 99-37 [download] and to tax year 2001 in IRS Notice 2000-62 [download].

If you wish to provide your valid SSN to the University for the purpose of generating tax materials, please follow the instructions elsewhere in this web site.

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Question:  I took a course through University Extension.  Am I eligible for an education tax credit?

Answer:  Possibly.  The Hope and Lifetime Learning tax credits are based upon "qualified education expenses."   Whether or not the fees you paid may be considered "qualified education expenses" depends in part on the nature of the course.  "What Expenses Do Not Qualify?", for either the Hope or Lifetime Learning credit, in  IRS Publication 970:   Tax Benefits for Higher Education [download] conveys that:

"Qualified tuition and related expenses generally do not include expenses that relate to any course of instruction or other education that involves sports, games, or hobbies, or any noncredit course. However, if the course of instruction or other education is part of the student's degree program [or, in the case of the lifetime learning credit, is taken by the student to acquire or improve job skills], these expenses can qualify."

Please note that UCI may not predict accurately whether or not a student took an Extension course to acquire or improve job skills.  Therefore, we did not disqualify payments using this criterion.  The University issued 1098-T forms with supplemental financial information to thousands of UCI Extension students.  If you did not receive tax information, try accessing your record at the TCRS web site obtain duplicate materials.  Any questions or problems with figuring and claiming an education tax credit should be addressed to a tax professional or to the IRS.

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Question:  I want to claim an education tax credit, but my parents say they should.  Can we both claim?

Answer: No.  For any tax year, only one person can claim an education tax credit for a given student's "qualified education expenses".  See "Who Cannot Claim the Credit?" and "Who Can Claim the Credit?", for either the Hope or Lifetime Learning credit, in IRS Publication 970:   Tax Benefits for Higher Education [download] or consult a tax professional to determine your eligibility for the Hope or Lifetime Learning tax credits.

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Question:  I withdrew from the only quarter I attended during the tax year.  Am I eligible for an education tax credit?

Answer:  Possibly.  Depending on the date you withdrew from the quarter, you may have received a full or partial refund of your tuition payment.   The Hope and Lifetime Learning tax credits are based upon "qualified education expenses," which do not include expenses that were refunded.  For either the Hope or Lifetime Learning credit, the "Refunds" section of IRS Publication 970:   Tax Benefits for Higher Education [download] explains that you must "reduce the amount of the expenses paid by the amount of the refund received."

If your tuition payment and refund both occurred in the current tax year, then the University simply netted the amounts in "Part 1: Qualified Education Expenses" on your "Information for IRS 8863" supplemental form.  As a result, a student who received a full refund might see a zero dollar amount for "qualified education expenses."

If your tuition payment occurred in the previous tax year, then any refund received in the current year was recorded in "Part 3:  Qualified Education Expenses Reversed or Refunded" on your "Information for IRS 8863" supplemental form.  The IRS requires you to refigure any education tax credit claimed in the prior year; see "When Must Credit Be Repaid?", for either the Hope or the Lifetime Learning credit, in IRS Publication 970:   Tax Benefits for Higher Education [download] for more information.

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The information provided in this web page is NOT tax advice.  It is offered only as general information for UCI students and their families.  Please consult a qualified tax expert for advice on computing, claiming, or determining qualification for any tax benefit mentioned in this web site.


Further information is available from:

U.S. Department of Education

U.S. Department of Education
(800) USA-LEARN or TTY (800) 437-0833
"Families' Guide to the 1997 Tax Cuts for Education"
The HOPE Scholarship and Lifetime Learning Credits

Internal Revenue Service

Internal Revenue Service
(800) 829-1040 or TTY/TDD (800) 829-4059
Along with general information about TRA 97, the IRS website also offers these specific links:
Notice 97-60:   Education Tax Incentives
Publication 970:  Tax Benefits for Higher Education
Tax Topic 605:  Education Credits
FAQ:  Hope & Lifetime Learning Educational Credits
Tax Trail:  Education Tax Credits

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