The 1997 Taxpayer Relief Act created benefits aimed at higher education.
- Student Loan Interest Deduction: A deduction may be claimed for interest on qualified education loans if the loans were used for tuition, fees, books, equipment, and room and board, and if the loans are in the first sixty months that interest payments are required.
- Hope Scholoarship Credit: This credit applies to expenses for the first two years of post-secondary education--graduate students may not use this credit.
- Lifetime Learning Credit: This credit may be used for tuition and related educational expenses paid after June 30, 1998. The maximum is $1,000 and declines if the adjusted gross income is $40,000 or more.
This Act requires universities to submit special forms to students and to the Internal Revenue Service: 1098-E (Student Loan Interest Statement), which indicates the amount of student loan interest paid during the tax year, and the 1098-T(Tuition Payment Statement), which indicates whether the student was enrolled at least half time for at least one academic period during the tax year.
Tuition waivers, such as the waiver for out-of-state tuition, as well as in-state tuition fellowships, are exempt from taxation according to the Tax Code Section 117D5. GTA and GRA stipends are exempt from FICA (Social Security) withholding if the student is enrolled and attending classes, though the stipends are subject to taxation.
This information is not intended as legal or tax advice. Please consult 2000 Publ 970 Tax Benefits for Higher Education . A useful publication from the IRS is Publ 4 Student's Guide to Federal Income Tax . Also check tax information at the National Association of Graduate and Professional Students web site for additional information. |
