Hope Tax Credit Lifetime Learning Tax Credit Tuition and Fees Deduction

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Agenda:. Taxes. Hope Tax Credit Lifetime Learning Tax Credit Tuition and Fees Deduction Important Information for 2008 Returns Qualified Tuition Programs Qualified Education Expenses Un-Qualified Education Expenses - PowerPoint PPT Presentation

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  • Hope Tax CreditLifetime Learning Tax CreditTuition and Fees DeductionImportant Information for 2008 ReturnsQualified Tuition ProgramsQualified Education ExpensesUn-Qualified Education ExpensesDepartmental Scholarships, Fellowships and Grants to U.S. Resident and Citizen studentsHope & Lifetime Learning Tax Credit Form 1098TAgenda:*

  • Hope Lifetime LearningStarting in 1998, the IRS promoted two tax credits to help students or families offset the costs of higher education by reducing the amount of the income tax, also referred to as education credits.*

  • The credit increased to $1,800 per eligible student in 2008Only for first two years of undergraduate programMust enroll at least half time Must be enrolled for at least one academic period of the yearHope Tax Credit*

  • Up to $2,000 tax credit per year (20% of total payment of $10,000)Available to all students and all programsFor an unlimited number of years Credit and non-credit classesLifetime Learning *

  • *If you pay qualified education expensesYour MGI is under $58,000 for a single person or under $116,000 if you file a joint return To claim the credit, use form 1040A or 1040To calculate the tax credit, use form 8863You Can Claim a Tax Credit

  • *If your filing status is married filing separatelyYou are listed as a dependent in the exemptions section on another persons tax return Your income is over $58,000 for single and over $116,000 for married-joint returnYou or your spouse were a non-resident alien for any part of 2008 and the non-resident did not elect to be treated as a resident for tax purposesYou Cannot Claim Tax Credits

  • Taken as an adjustment to incomeAvailable if your income is too high to take either the Hope or LifetimeIncome limit is $80,000 for single and $160,000 for marriedMaximum deduction amount is $4,000To claim:Use Form 8917 to calculate Report on Line 34 on Form 1040Report on Line 19 on Form 1040A

    Tuition & Fees Deduction*

  • *Important Information Due date is April 15, 2009

    State sales tax can be claimedRead publication 600 for more information

    Exemption is $3,500 per person

    Standard deduction is $5,450 for single and $10,900 for married couples

  • *Qualified Tuition Program(GET or 529 College Saving Program) Many states have programs that allow people to prepay or contribute to an account for paying qualified education expensesNo tax is due on a distribution for a QTP unless the amount distributed is greater than the qualified education expensesWashington State offers the GET program. Payments from this program are not reported on the 1098T tax form

  • Per IRS regulation, qualified education expenses are:tuition and tuition-related fees for enrollment or attendance at an eligible educational institutionQualified Education Expenses*

  • InsuranceRoom & BoardTravelResearchClerical HelpNon-Qualified Education ExpensesMedical Expenses (including student health fees)TransportationSimilar personal, living or family expenses*

  • A scholarship or fellowship is tax free when:the money is paying for qualified education expensesANDthe student is working towards a degreeDepartmental Scholarships, Fellowships, Grants*

  • The money will affect students financial aid status and can affect a students tax credit. When departments award money in SDB, the UW does not withhold tax.When departments award money in the SDB system, the Financial Aid Office will receive all the income information to determine the needs of students when they apply for financial aid.Prizes, awards, and stipends are taxable income.Prizes, Awards and Stipends to U.S. Citizens & Resident Students*

  • UW generates a 1098T form to all UW and Extension students by 02/02 On-line printing available from web sitewww.washington.edu/students/sfs/sao/maintax.htmlSummarizes all the tuition and fee chargesSummarizes scholarship, fellowship and financial aid money for students Helps students determine if they qualify for tax creditNonResident Alien Students do not qualify and will not receive the 1098T form1098T form for the Hope & Lifetime Learning Credit*

  • *UW Form 1098TUW reports tuition charges on IRS form Box 2. UW does not report payment informationBox 2 total of qualified tuition and fees expensesBox 5 total of scholarship or financial aid grants. When you compare box 2 to box 5:If box 2 total is greater than box 5 total, you will qualify for a tax creditIf box 5 total is greater than the box 2 total, you will have to report the difference in the amount as income

  • UW Form 1098THope and Lifetime Learning Tax CreditsStudent Information

    Box 2$6,534Box 5 - 0Difference $6,534

    Amount Eligible for Tax Credit Calculation is $6,534*

  • UW Form 1098TStudent Information

    Box 2$22,494Box 5 - 8,452Difference$14,042

    Amount Eligible for Tax Credit Calculation is $10,000Hope and Lifetime Learning Tax Credits*

  • *UW Form 1098T Student Information

    Scholarship IncomeBox 2 $ 7,894Box 5 - 9,039Difference-$1,145

    Amount Eligible to Claim as Income $1,145

  • UW Form 1098T Student Information

    Stipend via PayrollBox 2$ 6,624Box 5 - 22,620Difference -$15,996

    Amount Eligible to Claim as income is $15,996*

  • *IRS Form 1040To report scholarship income:line 7 schIf you file electronically, the program may ask questions and automatically fill in the form(s)

  • *IRS Form 1040 BackLine 50 To report tax creditsfrom form 8863

  • *IRS Form 1040ATo report scholarship income:line 7 schIf you file electronically, the program may ask questions and automatically fill in the form(s)

  • *IRS Form 1040A -BackLine 31To report tax credits from form 8863

  • *IRS Form 1040EZTo report scholarship income:line 1 schIf you file electronically, the program may ask questions and automatically fill in the form(s)

  • *IRS Form 1040EZ Back

  • Electronic Filing*

  • Free Tax ServicesIRS Guide to Free Tax Service Contains:List of free tax publications Index of tax topics

    To contact your advocate:Phone:1-877-777-4778Web: www.irs.gov/advocate*

  • Free Tax ServicesSeattle Public Library1000 4th Ave. Seattle 98104

    Tue, Wed, Thu 12:00 noon -7:00 p.m.Sat 12:00 noon 4 p.m.Sun 1:00 p.m. - 5:00 p.m.*

  • For more informationIRS web site: www.irs.govHope, Lifetime, Scholarships:IRS Publication 970*

  • http://f2.washington.edu/fm/sfs/tax/student*

  • For a no-hassle, paperless, environmentally friendly 1098T, sign up to Opt Out of receiving the paper 1098T form. Student Fiscal Services will send you an email as soon as the 1098T is on your MyUW page!

    For more information go to:

    http://f2.washington.edu/fm/sfs/tax/student*

  • *For Frequently Asked QuestionsUW student tax websitehttp://f2.washington.edu/fm/sfs/tax/student

    Other Questions?

    Send email to: taxquest@u.washington.edu