Hope Tax Credit | Lifetime Learning Credit | 1098-T | Student Loan Interest Deduction

The Taxpayer Relief Act (TRA) of 1997 (Public Law 105-34 (111 Stat. 788 (TRA '97) added Section 25A to the Internal Revenue Code to provide the Hope Scholarship Credit and the Lifetime Learning Credit (education credits). In general, the Hope Scholarship Credit and the Lifetime Learning Credit allow taxpayers to claim a non refundable credit against their federal income taxes for certain post-secondary educational expenses. The Legislation allows certain students, or their parents, to obtain a tax credit or deduction for tuition and qualified fees.

Hope Tax Credit This credit is for students who are enrolled in one of the first two years of post secondary education and are carrying at least a half-time workload while pursuing an undergraduate degree. Maximum amount of credit per student is $1,650 for qualified educational expenses. 100 percent of the first $1,100 and 50 percent of the next $1,100.

You are eligible for the Hope Credit for a student if all of these items apply.

1. As of the beginning of the calendar year, the student had not completed the first 2 years of post secondary education - this is generally, the freshman and sophomore years. For this purpose, do not include academic credit awarded solely because of the student's performance on proficiency examinations.

2. The student was enrolled in 2005 in a program that leads to a degree, certificate, or other recognized educational credential.

3. The student was taking at least half-time the normal full-time workload for his/her course of study for at least one academic period beginning in the calendar year.

4. The student has not been convicted of a felony for possessing or distributing a controlled substance.

Lifetime Learning Tax Credit For students who take one or more classes from a college or university to pursue an undergraduate or graduate degree to acquire or improve job skills. The maximum amount for the Lifetime Learning Credit is $2,000 per return,for qualified educational expenses. This credit is available for an unlimited number of years.

The TRA '97 added Section 6050S to the Code, which requires eligible educational institutions to file information returns (IRS Form 1098-T) to assist the taxpayer and the IRS in determining the education credit that taxpayers may claim under Section 25A.

A college or university that received qualified tuition and related expenses is required to file the 1098-T with the IRS. A copy of the form is furnished to the student, if eligible.

1098-T West Virginia University will mail the Form 1098-T to students/parents with qualified tuition and related expenses in the calendar year. This form will be mailed by January 31, of the following year. Should students/parents have questions concerning the 1098-T form, or general questions regarding the Hope and Lifetime Learning tax credits, they are encouraged to click here: http://1098t.wvu.edu .

Students can elect to have their 1098-T Form delivered electronically at the 1098-T website. There is a link to "Why use this System" in the left column of http://1098t.wvu.edu that provides useful information about the 1098-T program at WVU along with other links in the left column.

If you do not activate your account, a hardcopy 1098-T will be sent to you by January 31st.

Student Loan Interest Deduction - Taxpayers who have borrowed loans to pay the cost of attending an eligible educational institution for themselves, their spouse, or their dependent generally may deduct interest they pay on these student loans. The deduction is available only for interest payments made during the first 60 months in which interest payments are required on the loan. The maximum deduction each taxpayer is permitted for 2004 is $2500.

Eligible borrowers will receive form 1098-E from the holder(s) of their student loans. This form will report how much qualified student loan interest was paid during the previous calendar year. Borrowers may receive more than one of these if they are making payments on student loans to multiple lending institutions. WVU's Student Loan Servicer, ECSI, will issue form 1098E for qualified interest payments on the Federal Perkins Loans, Health Profession Loans, and West Virginia Institutional Loans. Any questions on interest payments for these loans should be addressed to ECSI at (412) 788-3900.

Eligible borrowers involved with the William D. Ford Federal Direct Loan Program will also receive a separate 1098-E form from this program. Questions concerning the interest on the Direct Loans should be addressed to Direct Loan Borrower Services at 1-800-848-0979.

Note :For specific questions concerning the tax credits and the Student Loan Interest Deduction, or for tax guidance, taxpayers should contact the Internal Revenue Service at 1-800-829-1040, or consult with a tax adviser.