Hope & Lifetime Learning Tax Credit

The Hope tax credit is available for students who, at the start of the year, have not completed their second year of post secondary education. The credit provides up to $1,650 (100% of the first $1,100 in qualified tuition and related expenses, and 50% of the next $1,100) per student. The Hope tax credit is calculated on eligible expenses paid during the 2007 calendar year. To be eligible for the Hope tax credit, the student must be enrolled at least half time for at least one academic period at Notre Dame. There are other provisions and requirements that should be reviewed before claiming the Hope tax credit on your tax return. For your reference, we have provided some helpful links further down on this Web page.

The Lifetime Learning tax credit is a less restrictive tax credit of up to $2,000 (20% of the first $10,000 of qualified tuition and related expenses) per family (the Hope credit is per student.) The Lifetime Learning credit is also calculated on eligible expenses paid during the 2007 calendar year. While the Lifetime Learning tax credit is more broadly applicable to post-secondary education, it is still important to look into the specifics of the credit before claiming it on your tax return.

Further down on this Web page you will find some links that might be helpful in your research.

General Information

In January, 2008, you will receive Form 1098-T from the University of Notre Dame for the 2007 tax year. The 1098-T contains data elements that the IRS will find helpful in calculating a student's eligibility for the Hope Scholarship credit and Lifetime Learning Credit. If you have specific questions about what is reported on the form, please refer to the "Instructions for Student" provided with the 1098-T.

Note: The University of Notre Dame has elected (as allowed by IRS regulations) to report the aggregate amount of qualified tuition and related expenses billed. However, the tax credit is based on the amount of qualified tuition and related expenses actually paid. Please refer to your University Student Account Statements and determine the amount of qualified tuition and related expenses that you actually paid during the calendar year 2007 when computing your credit.

In the October 23, 2006 e-News for Tax Professionals, the IRS stated, "Form 1098-T is not acceptable documentation for educational expenses. Some taxpayers mistakenly believe the form serves as a record of educational expenses paid. However, the form, issued by universities, only documents tuition that the school billed, not what the student paid. Tax professionals can help by making sure all tuition and expenses claimed are backed up with thorough records."

Credit can't be claimed for tuition expenses paid with tax-free funds (scholarships, grants, etc.). Credit can be claimed, however, for tuition expenses paid with loans of any type. In the case where both sources of funds are used to pay both tuition and housing expenses, all tax-free aid is presumed by the IRS to be applied to tuition expenses first. The exception to this rule would be a scholarship or grant specifically designated by the grantor to be used for housing, books or other non-tuition expenses.

Note: Box 9 on Form 1098-T should be checked if you are a graduate student.

You are not required to attach IRS Form 1098-T to your tax return. Keep this Form with your tax documentation for 2007.

To claim the credit you will need to complete and attach IRS 2007Form 8863 with your tax return. No other documentation or supporting paperwork is required to be attached to your tax return except Form 8863.

Note: The IRS recently announced that taxpayers filing Form 8863, Education Credits must wait until February 11, 2008 before filing as a result of the December 26, 2007 signing of the alternative minimum tax patch legislation (AMT patch).

If you are married with a combined modified adjusted gross income of more than $114,000, or single with an adjusted gross income of more than $57,000, then you do not qualify for either tax credit in 2007.

Married Taxpayers must file jointly to qualify for either tax credit.

Further information can be obtained at the following links:

  1. If your student name and address or social security number is incorrect, you can make corrections on-line at http://www.tra.pearsongov.com To complete these changes, you will need Notre Dame's school OPE/ID code (00184000) and your individual PIN, which is identified at the bottom left corner of your Form 1098-T.
  2. NACUBO's Education Tax Credit site provides information on both tax credits, as well as information about some of the other provisions of the Taxpayer Relief Act. It also has some links to various IRS publications. NACUBO is the National Association of College and University Business Officers.
  3. IRS Publication 970, Tax Benefits for Education, for use in preparing 2007 returns.
  4. "Parent and Student Guide & Federal Tax Benefits for Tuition and Fees" provided by NASFAA (National Association of Student Financial Aid Administrators).
  5. IRS 2007 Form 8863 Instructions, click here.

 

If you want to obtain specific information about your University of Notre Dame Student Account, any student can access information using insideND.

The University of Notre Dame may not provide tax or legal advice and therefore cannot determine if you qualify for either credit. If you believe that you qualify for the Hope or Lifetime Learning Tax Credits, consult your tax advisor, or contact the IRS at 1-800-829-1040.

If you have questions or comments, we can be reached at hopetax.1@nd.edu