Taxpayer Relief Act Information
We recommend that you read through each subject in the order that we have presented here.
Your Responsibility as a Taxpayer
We have attempted to convey to our students the most comprehensive summary of the data needed for completion of annual income tax returns. The College is prohibited from providing any income tax preparation advice related to the credits.
The College cannot determine if you qualify for one of these tax credits or the amount of credit that may be due. We suggest that you order the necessary income tax forms if you intend to complete your own income tax return or consult a tax advisor.
The Taxpayer Relief Act of 1997
Hope Scholarship & Lifetime Learning Credits
As part of the Taxpayer Relief Act of 1997, several new tax benefits are available to help families meet the cost of postsecondary education. The Hope Scholarship and Lifetime Learning credits allow taxpayers to claim one, or in some cases, two tax credits for postsecondary educational expenses that can directly reduce the amount of federal income tax due for returns filed in 1999 or beyond. There were additional tax benefits created related to student loan interest deductions and Individual Retirement Accounts (IRA). SUNY is required to report, via Form 1098T, to both students and the Internal Revenue Service those individuals who may be eligible for the Hope Scholarship or Lifetime Learning credits based on enrollment at the campus during the calendar year. Listed below is a basic summary of both credits.
Provisions That Are Common To Both Credits
Who is Eligible - You, your spouse, or an eligible dependent can be an eligible student as long as the student was enrolled at the College for at least one academic semester during the year. See below for further academic eligibility requirements specific to the Hope and Lifetime Learning credits.
Income Limitations - The full value of both credits is available to married taxpayers filing jointly with an adjusted gross income (AGI) of $80,000 or less and to single taxpayers with an AGI of $40,000 or less. The tax credits phase out gradually from those points, and once the AGI exceeds $100,000 (married) or $50,000 (single), taxpayers are no longer eligible for a credit. These income limits may be adjusted for inflation after 2002.
What Expenses Qualify - Eligible educational expenses, net of scholarships, grants and employer-provided educational assistance, are qualified for consideration in determining your credit. Additionally, educational expenses paid through loans are eligible for the credits. For more information on how to determine eligible expenses and the application of aid against those expenses please consult IRS Publication 970.
Prepaid Expenses - If you pay for qualified expenses for an academic period that begins in the first three months of the following year, you may use the prepaid amount in figuring your credit. For example, if you pay your Spring 2005 expenses in December, 2004, you may use that amount in figuring your 2004 credit. However, you cannot use any amount you paid in 2003 for figuring your credits on your 2004 return.
Provisions That Are Specific To The Hope Scholarship Credit
For expenses paid after December 31, 1997, for academic terms beginning after that date (Spring 1998 and beyond), you may be able to claim this credit for each eligible student. The credit may only be claimed for two years for each student. Additionally, students must meet the following requirements:
- Be enrolled in one of the first two years of postsecondary education (generally, the freshman and sophomore years of college).
- Be enrolled as a matriculated student in a degree program.
- Be taking at least 6 credits in at least one semester during the year.
- Be free of any felony conviction for possessing or distributing a controlled substance.
he amount of the credit is 100% of the first $1,000 plus 50% of the next $1,000 paid for each student's eligible expenses. Thus, the maximum credit is $1,500 for each eligible student. You will need to fill out IRS Form 8863 in order to claim the credit.
Provisions That Are Specific To The Lifetime Learning Credit
For expenses paid after June 30, 1998, for academic terms beginning after that date, you may be able to claim this credit for all eligible students.
Unlike the Hope credit:
- The Lifetime Learning credit is not based on a student's course load. It is allowed for one or more courses.
- You do not have to be a matriculated student enrolled in a degree program.
However, it should be noted that IRS Notice 97-73 states that "any course involving sports, games or hobbies are not eligible for the credit, unless the course is part of the student's degree program." Obviously, only the taxpayer can make the determination whether their coursework fits this criteria.
- The Lifetime Learning credit is not limited to students in the first two years of postsecondary education. Also, there is no limit on the number of years the credit may be claimed for each eligible student.
- The amount you can claim as a Lifetime Learning credit does not vary (increase) based on the number of eligible students qualified. The amount of the credit is 20% of the first $5,000 paid for all eligible students in the family. Thus, the maximum credit for 2004 is $1,000 (20% of $5,000). You will need to fill out IRS Form 8863 in order to claim the credit.
What Do the Credits Mean as a SUNY Canton Student?
If you were a first or second year matriculated student (accepted into a degree program) during the Spring, Summer or Fall semesters and you took at least six credits during any of the semesters, you pass the initial test of eligibility for the Hope Scholarship credit. You would then have to meet the other requirements for eligibility in order to claim the credit.
These are detailed above in the The Taxpayer Relief Act of 1997 - Hope Scholarship & Lifetime Learning Credits section.
All other individuals - non matriculated, matriculated juniors & seniors, continuing education and less than half time matriculated students - are eligible only for the Lifetime Learning credit. This means that only coursework for which the term began after June 30th is eligible for consideration in determining the credit.
In late January or early February, you will receive Form 1098T from the State University of New York. Because all SUNY institutions share the same federal tax identification number, these forms are being sent out centrally rather than by each individual campus. The same information is being furnished to the Internal Revenue Service (IRS).
Your receipt of the 1098T only indicates that you were enrolled at SUNY Canton for at least one course during the calendar year, and does not necessarily mean that you are eligible for either the Hope Scholarship or Lifetime Learning credit. In order to determine your eligibility, consult your tax advisor or IRS Publication 970. You can print your own 1098-T by logging into your UCanWeb account. Click on Student Menu, then Student Records, and select Tax Notification. Enter the year you need the form for.
On the 1098T form, the following definitions apply:
Tuition and Fees refers to the required SUNY-wide, mandatory College and Technology fees plus the Tuition charges for attending SUNY Canton.
"Grants and Scholarships" indicates those monies awarded to the student, exclusive of loans.
The final decision for determining which educational expenses are eligible will ultimately rest with you, the taxpayer. We suggest that you obtain a copy of IRS Publication 970 to familiarize yourself with all of the requirements for the tax credits, or consult your tax advisor.
Please remember, the College is prohibited from providing any income tax preparation advice related to these credits.
How to Obtain More Information & Order Tax Forms
The National Association of College and University Business Officers (NACUBO) has been spearheading the efforts of the higher education community in working with the Internal Revenue Service to clarify some of the language and definitions of the Hope Scholarship and Lifetime Learning Credits. For information on this subject, as well as links to other relevant sites, visit NACUBO's web site at: http://www.nacubo.org
Additional information is also available at the Department of Education's website at: www.ifap.ed.gov/pbulletins/doc0001_bodyoftext.htm
As mentioned elsewhere in this website, you will need a copy of IRS Form 8863 to claim either of the credits on your return. You should also order IRS Publication 970 to familiarize yourself with the various provisions of the tax benefits for higher education. To obtain these forms, you can call 1-800-TAX-FORM or go to http://www.irs.gov/formspubs/ to order the forms through the Internet.
The federal government also provides information in a question-and-answer format concerning the two types of credits at the following web addresses:
The National Association of Student Financial Aid Administrators (NASFAA) has useful information in its Parent & Student Guide to Federal Tax Benefits for Tuition & Fees publication. The following link goes directly to their site, http://www.nasfaa.org/students/Tax_Breaks_for_Higher_Education.aspx