The Hope Scholarship and Lifetime Learning Tax Credit You may be eligible to claim a nonrefundable Hope Scholarship Credit or Lifetime Learning Tax Credit. Loyola will send a Tuition Payments Statement (1098-T) form to all students who are or have been registered during any term during the 2009 calendar year. The 1098-T form will be mailed to students by January 31, 2010 at their permanent address. Below you will find an overview of both the Hope Scholarship and Lifetime Learning Tax Credits. Please read this information in its entirety. Learn more about:
Understanding the Hope Scholarship Credit What is the Hope Scholarship? The Hope Scholarship is a tax credit, not a scholarship. Tax credits are subtracted directly from the tax your family owes, instead of subtracting them from taxable income like a tax deduction. Your family must file a tax return and owe taxes to get this credit. You can not get a refund for the Hope credit if your family does not pay taxes or if your family owes less in taxes than the maximum amount of the Hope credit for which the family is eligible. Your family may claim a tax credit of up to $1,500 per tax year for each eligible dependent. This can be done for up to two tax years. A family may claim up to 100% of the first $1,000 of eligible expenses and 50% of the next $1,000 for a maximum credit of $1,500. The exact amount of the credit depends on your family's income, the amount of qualified tuition and fees paid, and the amount of certain scholarship and allowances subtracted from tuition. The total maximum credit is also based on how many eligible dependents are in your family, rather than a maximum dollar amount for the family, like the Lifetime Learning tax credit.
Who Qualifies? The Taxpayer: An eligible taxpayer must file a return and owe taxes to claim the credit. In addition, the taxpayer must claim an eligible student as a dependent on the tax return, unless the credit is for the taxpayer or the taxpayer's spouse. (This means the eligible taxpayer may also be the eligible student.) Taxpayers may be eligible for the largest credit with an Adjusted Gross Income (AGI) of up to $40,000 for a single taxpayer or $80,000 for married taxpayers. The credit amount is gradually reduced for families with incomes between $40,000 and $50,000 if single or
$80,000 and $100,000 if married. The Student: The tax law says an eligible student must be enrolled at least half-time in an eligible program leading to a degree or certificate during the calendar year AND must not have completed the first two years of undergraduate study. You may claim the credit yourself if you are not claimed as a dependent by another taxpayer. (Once again, this means that the eligible student may also be the eligible taxpayer.) In addition, you may not have been convicted of a Federal or State felony drug offense before the end of the tax year in which you are enrolled.
How do you get the credit? To apply for the credit, the taxpayer must report the amount of tuition and fees paid as well as the amount of certain scholarships, grants and untaxed income used to pay the tuition and fees. The law says that schools must send this information in the form of a "return" to each taxpayer and to the IRS. For the 2008 tax year, this return will include: (1) the name, address, and taxpayer ID number of the school; (2) whether the student was enrolled at least half-time; and (3) whether the student was enrolled only in a graduate-level program. Loyola will mail this to you by January 31, 2009 for the 2008 tax year .
When is the credit available? The taxpayer may claim the Hope credit for qualified expenses paid January 1, 2008 through December 31, 2008 for education furnished in academic periods during this time. Taxpayers may pay educational expenses in a tax year for an academic period that begins the following tax year (e.g., paying in December 2008 for an academic period beginning in the first three months of 2009).
Can a family claim multiple benefits? A family may claim a Hope credit, a Lifetime Learning credit and an exclusion from gross income for certain distributions from qualified State tuition programs or education IRAs as long as the same student is not used as the basis for each credit or exclusion and the family does not exceed the Lifetime Learning maximum per family.
What expenses are eligible for the Hope credit? The Hope Credit may be claimed for the qualified tuition and related expenses. Qualified expenses include tuition and qualified fees required for enrollment or attendance of taxpayers, their spouses, or any of their dependents. Qualified fees include: registration, graduation, and laboratory.
What expenses are not eligible for the Hope Credit? Qualified expenses do not include: expenses for courses relating to sports, games, or hobbies unless such courses are part or a student's degree program; student activity fees, athletic fees, student insurance fees, and other fees not related to an academic course of instruction; or charges and fees associated with room and board, books, equipment, transportation, and other personal, living, and family expenses.
Understanding the Lifetime Learning Tax Credit What is the Lifetime Learning Tax Credit? The Lifetime Learning credit is a tax credit available to individuals who file a tax return and owe taxes. This means the amount of the credit is subtracted directly from the taxes your family owes, instead of from taxable income like a tax deduction does. You can not get a refund for the Lifetime Learning credit if your family does not pay taxes or if your family owes less in taxes than the maximum amount of the Lifetime Learning tax credit for which your family is eligible. Your family may claim a tax credit of up to $1,000 per tax year (until January 1, 2003) and up to $2,000 (after that date) for the taxpayer, taxpayer's spouse, or any eligible dependents for an unlimited number of tax years. A family may claim up to 20% of $5,000 of eligible expenses for expenses paid after June 30,1998, and prior to January 1, 2003, and up to 20% of $10,000 of eligible expenses (for expenses paid after January 1, 2003, and after). The actual amount of the credit depends on your family's income, the amount of qualified tuition and fees paid, and the amount of certain scholarships and allowances subtracted from tuition. This credit is family-based (e.g., $1,000 per family) rather than based on the number of dependents in your family like the Hope credit.
Who Qualifies? The Taxpayer: An eligible taxpayer must file a return and owe taxes to claim the credit. The taxpayer must also claim the eligible student as a dependent, unless the credit is for the taxpayer or the taxpayer's spouse. (This means the eligible taxpayer may also be the eligible student.) The taxpayer may be eligible for the maximum benefit with an adjusted Gross Income (AGI) of up to $40,000 for a single taxpayer or $80,000 for married taxpayers. The credit amount is gradually reduced for families with incomes between $40,000 and $50,000 if single or between $80,000 and $100,000 if married. The Student: An eligible student must be enrolled at least half-time in an eligible program leading to an undergraduate or graduate degree during the calendar year OR must be enrolled at any enrollment level in any course of instruction to acquire/improve the student's job skills during the calendar year. You may claim the credit yourself if you are not claimed as a dependent by another taxpayer. (Once again, this means that the eligible student may also be the eligible taxpayer.) In addition, you nay not have been convicted of a Federal or State felony drug offense before the end of the tax year in which you are enrolled.
How do you get the credit? To apply for the credit, the taxpayer must report the amount of tuition and fees paid as well as the amount of certain scholarship, grants, and untaxed income used to pay the tuition and fees. The law specifies that schools will supply this information in the form of a "return" to individual taxpayers and to the IRS. For the 2008 tax year, this return will include: (1) the name, address, and taxpayer ID number of the school; (2) whether the student was enrolled at least half-time; and (3) whether the student was enrolled only in a graduate-level program. Loyola will mail this to you by January 31, 2009 for the 2008 tax year.
When is the credit available? The taxpayer may claim the Lifetime Learning credit for qualified expenses paid January 1, 2008 to December 31, 2008.
Can a family claim multiple benefits? A family may claim a Lifetime Learning credit, a Hope credit and exclusion from gross income for certain distributions from qualified State tuition programs or education IRAs as long as the same student is not used as the basis for each credit or exclusion AND the family does not exceed the Lifetime Learning maximum per family.
What expenses are eligible for the Lifetime Learning Credit? The Lifetime Credit may be claimed for the qualified tuition and related expenses. Qualified expenses include tuition and required fees required for enrollment or attendance. Qualified fees include: registration, graduation, laboratory, thesis guidance, dissertation, and clinical training, fees.
What expenses are not eligible for the Lifetime Learning Credit? Qualified expenses do not include: expenses for courses relating to sports, games, or hobbies unless such courses are part or a student's degree program; student activity fees, athletic fees, student insurance fees, and other fees not related to an academic course of instruction; or charges and fees associated with room and board, books, equipment, transportation, and other personal, living, and family expenses.
For More Information Loyola University Maryland will supply any additional information or answer any questions regarding student accounts; however, the University can not offer any tax advice. You should consult your tax advisor with your specific questions. For additional information about the Hope and Lifetime Tax Credits see: Publication 970 Tax Benefits for Higher Education
Department of the Treasury
Internal Revenue Service
http://www.irs.ustreas.gov National Association of Student Financial Aid Administrators
http://www.nasfaa.org
or 1-800-TAX-FORM
Source: National Association of Student Financial Aid Administrators (NASFAA) | 
