Tax Benefits for Education
The Hope Credit and Lifetime Learning Credit took effect in 1998. These are designed to help taxpayers reduce the cost of tuition and fees paid for higher education. The amount of an education credit is determined by the amount of qualified tuition and related expenses you paid for each eligible student and the amount of your Modified Adjusted Gross Income (MAGI).
The Hope Credit
The Hope Credit and Lifetime Learning Credit are designed to help taxpayers reduce the cost of tuition and fees paid for higher education. The amount of an education credit is determined by the amount of qualified tuition and related expenses you paid, or if dependent, your parents paid and the amount of your Modified Adjusted Gross Income (MAGI). The MAGI is the Adjusted Gross Income (AGI) as figured on the federal income tax return modified by the tax credit. Go to www.irs.gov to determine the MAGI.
The Hope Credit
What is the tax benefit of the Hope Credit? For the 2007 tax year, you may be able to claim a Hope Credit of up to $1,650 for qualified education expenses paid for each eligible student. A tax credit reduces the amount of income tax you may have to pay. Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself. The Hope Credit is a nonrefundable credit. This means that it can reduce your tax to zero, but if the credit is more than your tax the excess will not be refunded to you.
The Lifetime Learning Credit
What is the tax benefit of the Lifetime Learning Credit? For the 2007 tax year, you may be able to claim a Lifetime Learning Credit of up to $2,000 for qualified education expenses paid for all students enrolled in eligible educational institutions. There is no limit on the number of years the Lifetime Learning Credit can be claimed for each student. A tax credit reduces the amount of income tax you may have to pay. Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself. The Lifetime Learning Credit is a nonrefundable credit. This means that it can reduce your tax to zero, but if the credit is more than your tax the excess will not be refunded to you.
What if Financial Aid paid for some of my tuition?
Tuition and fees covered by grants, scholarships or waivers do not count when claiming tax credits. Only those expenses paid by student loans or your own resources (or your parent's own resources) may be included. Box number 1 on Form 1098-T contains the amount of qualified tuition and fees you paid during 2007. If you made a late payment for a prior eligible term or a prepayment of Spring 2008 tuition and fees, that payment is also included in Box number 1. Box number 4 reports the amount of grants, scholarships and waivers you received which offset 2007 tuition and fees.
What if I have questions about the information reported in the 1098-T that I received from the City Tech?
The staff in the Business Office can assist you with any questions you may have about the information reported on the 1098-T. Their office is located at 25 Chapel Street, 11th floor, or you can call 718.473.8900 for assistance.
Where can I get more information?
You can go to www.irs.gov or call the IRS at 1.800.TAX.FORM and request Publication 970 and Form 8863. You may also wish to consult a tax advisor.
For more information about the Hope Credit and the Lifetime Learning Credit, visit the websites below:
Office of Post Secondary Education
The U.S. Department of Education
The National Association of Student Financial Aid Administrators
The National Association of College and University Business Officers
| Useful Numbers | |
|---|---|
| Direct Loan Service Center | 800.848.0979 |
| ECSI Billing Servicer | 888.549.3274 |
| Federal Aid Information | 800.433.3243 |
| Federal Pell Grant | 319.337.5665 |
| GI Bill | 888.442.4551 |
| HESC Loan Default | 800.666.0991 |
| IRS Information | 800.829.1040 |
| TAP | 888.697.4372 |
| Tuition Pay Plan | 866.267.CUNY |
| Selective Service | 847.688.6888 |
| Social Security Administration | 800.772.1213 |
| VA Benefits Information | 800.827.1000 |
