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Education Tax Credits (Formerly TRA '97)

Samford University has contracted with outside vendors to provide students with the required 1098T and 1098R forms.  

For information regarding your 1098T form for a calendar year please visit the ECSI web page at www.ecsi.net/myacct . School code = 7N; Account # = Student’s SSN
Pin # = is given to the students when ECSI mails them a copy or email them their web access

1098T FORMS FOR HOPE AND LIFETIME TAX CREDIT AND 1098R FOR LOAN INTEREST IN ACCORDANCE WITH THE TAX REFORM ACT OF 1997 WILL BE MAILED ON OR BEFORE JANUARY 31.  

(The following information was prepared to inform students about the tax credit contained in the Tax Relief Act of 1997. It is based upon our understanding of the provisions contained in the law and should not be considered an official document. Students should rely upon the advice of their tax accountant or the Internal Revenue Service.)  

The following telephone numbers and web sites may be helpful if you need further information concerning these credits:
IRS - 1-202-622-4910
IRS - 1-202-622-2970 Office of Public Liaison
IRS Forms - 1-800-TAX-FORM for IRS publication 970 "Tax Benefits for Higher Education"

General information available on the Web

The Taxpayer Relief Act of '97 created two education tax credits for students and families and required the Form 1098T to be filed with both the student and the Internal Revenue Service for tax year 1998. The following is a brief explanation of these credits.

HOPE TAX CREDIT

This tax credit provides support for students enrolled in a degree or certificate-granting program at an eligible educational institution. The tax credit equals all of the first $1,000 of qualified tuition and fees and half of the next $1,000 of qualified tuition and fees. In computing the credit, qualified tuition must be reduced for refunds, scholarships, grants and other tuition benefits that are afforded tax-free treatment, including Pell grants, tax-free employer-provided educational assistance and possibly veterans benefits. If a student receives a tax-free distribution from an education IRA in a particular tax year, none of that student's expenses can be used as the basis of a higher education credit for that tax year. The Hope credit can be claimed for only two tax years (per student) and applies only to the first two years of postsecondary education. Students must be enrolled at least halftime during at least one academic period that begins during the tax year and cannot have had a felony conviction for possessing or distributing a controlled substance. The Hope credit is available for expenses paid on or after January 1, 1998, for academic periods beginning in 1998. This credit is available to parents of dependent students or to students who are not claimed as dependents on their parents' returns.(This information is not intended as legal or tax advice. Individuals should obtain IRS Publication 970, Tax Benefits for Higher Education, or contact a tax practitioner about personal income tax situations.)  

LIFETIME LEARNING TAX CREDIT

This tax credit is more broadly applicable to any postsecondary education if to acquire or improve job skills. A taxpayer can claim a credit equal to 20 percent of $5,000 of education expenses for the taxpayer, his or her spouse, or dependent children. The maximum credit for 1998 is $1,000 per family, not per student. Eligible education expenses are offset by refunds, scholarships, grants and other tax-free tuition benefits. For 1998, only expenses paid on or after July 1 for academic periods beginning on or after that date are eligible for this tax credit.

THE FULL CREDITS ARE LIMITED TO INDIVIDUALS WITH MODIFIED ADJUSTED GROSS INCOME OF $40,000 PER YEAR OR LESS OR $80,000 FOR MARRIED INDIVIDUALS FILING JOINT RETURNS. A PROPORTIONAL PHASEOUT TAKES PLACE FOR THOSE WITH INCOMES BETWEEN $40,000 TO $50,000 FOR INDIVIDUALS AND BETWEEN $80,000 AND $100,000 FOR MARRIED TAXPAYERS. MARRIED TAXPAYERS MUST FILE A JOINT RETURN IN ORDER TO CLAIM EITHER CREDIT. FOR EACH ELIGIBLE STUDENT, AN ELECTION MUST BE MADE FOR ANY TAX YEAR TO INCLUDE ONLY ONE OF THE CREDITS OR A TAX-FREE WITHDRAWAL FROM AN EDUCATION IRA.

For purposes of computing the credits, qualified tuition includes tuition and fees required for enrollment or attendance. According to IRS Publication 970, "qualified expenses do not include books, room and board, student activities, athletics (unless the course is part of the student's degree program), insurance, equipment, transportation, or other similar personal, living or family expenses."

(This information is not intended as legal or tax advice. Individuals should obtain IRS Publication 970, Tax Benefits for Higher Education, or contact a tax practitioner about personal income tax situations.)

STUDENT LOAN INTEREST

A taxpayer may deduct an amount equal to the interest paid by the taxpayer during 1998 on any qualified education loan.

Qualified education loans do not include indebtedness owed to a person who is related to the taxpayer. Home equity loans can be included if used to pay for education expenses.

The maximum deduction is limited to $1,000 for 1998, $1,500 for 1999, $2,000 for 2000 and $2,500 for 2001 and subsequent years.

The deduction is limited by adjusted gross income in a manner similar to the HOPE scholarship, but with adjusted gross income limits of $40,000 (single) and $60,000 (joint, proportionally reduced for adjusted gross incomes up to $55,000 (single) and $75,000 (joint). The adjusted gross income limits will be adjusted for inflation after 2002, with the limits being rounded to the next lowest multiple of $5,000.

Dependents are not eligible for the deduction. If the student is claimed as a dependent by his/her parents, then the student may not take this deduction during that tax year. The parents may take the deduction. However, if the student is not claimed as a dependent, both the student and parents may take the deduction, but only for the interest paid by each. Married couples must file a joint return to be eligible. The deduction is allowed whether or not the taxpayer itemizes other deductions.

The deduction is limited to the interest paid during the first 60 months (5 years) in which interest payments are required on the loan. The deduction applies to interest paid after December 31, 1997.

(Once again, Samford University strongly recommends students and/or their families consult with a tax professional to determine whether or not the TRA '97 tax credits may be applicable.)

The short time frame from passage of the law in August 1997 to implementation of the law in January 1998 was insufficient for the Department of the Treasury to issue official regulations. TRA '97 has been, and will continue to be a time consuming and costly regulation for institutions of higher education to implement. The Department of the Treasury failed to take into consideration that institutions of higher learning did not have sufficient time to implement procedures to accommodate their reporting requirements. Additionally, institutional resources are committed to bringing all systems into compliance with the year 2000. Throughout the year you have received all the information regarding institutional charges and payments. There will be no forms generated for Continuing Education participants. Please refer to your personal records for charges and payments for the 1998 calendar year.

For additional information, contact the Samford University Bursar's Office:

1-800-888-7214(toll-free)
205-726-2816 (phone)
205-726-2184 (fax)
broffice@samford.edu (e-mail)

Samford University
Bursar's Office
800 Lakeshore Drive
Birmingham, Alabama 35229

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