Education Tax Credits
Taxability of Scholarships and Grants
Scholarship or grant amounts received may or may not be taxable. You should consult your tax advisor and/or IRS Publication 970, Tax Benefits for Education (PDF).
American Opportunity & Lifetime Learning Tax Credits
The American Opportunity tax credit is available for students who, at the start of the year, have not completed their fourth year of post secondary education. The credit provides up to $2,500 (100% of the first $2,000 in qualified tuition and related expenses, and 25% of the next $2,000) per student. The American Opportunity credit is calculated on eligible expenses paid during the 2014 calendar year. To be eligible for the American Opportunity 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 American Opportunity tax credit on your tax return.
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 American Opportunity credit is per student). The Lifetime Learning credit is also calculated on eligible expenses paid during the 2014 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 to further information on the American Opportunity and Lifetime Learning Tax Credits.
In January 2015, you will receive Form 1098-T from the University of Notre Dame for the 2014 tax year. The 1098-T contains data elements that the IRS will find helpful in calculating a student's eligibility for the American Opportunity 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.
Please Note the Following:
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 to determine the amount of qualified tuition and related expenses that you actually paid during the calendar year 2014 when computing your credit.
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.
- 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 2014.
- To claim the credit you will need to complete and attach IRS 2013 Form 8863 with your tax return. No other documentation or supporting paperwork is required to be attached to your tax return except Form 8863 (i.e., Form 1098-T should not be attached to your individual return).
- If you are married with a combined modified adjusted gross income of more than $180,000, or single with an adjusted gross income of more than $90,000, then you do not qualify for the American Opportunity tax credit in 2014.
- If you are married with a combined modified adjusted gross income of more than $128,000, or single with an adjusted gross income of more than $64,000, then you do not qualify for the Lifetime Learning Credit in 2014.
- Married Taxpayers must file jointly to qualify for either tax credit.
- If you want to obtain specific information about your University of Notre Dame Student Account, any student can access information using insideND.
- If you need a copy of Form 1098-T, you can obtain one from the Vangent TRA Services web page. Once you arrive at their web site:
- Select "First Time Students"
- Enter the requested student information:
a. Last five (5) digits of Social Security Number (the University has not provided Student ID numbers to Vangent)
b. First and Last Name (name data must match name listed in insideND)
- Complete Registration Process
- Current students can view Form 1098-T information by visiting their Student Academic section of the University's web site at http://inside.nd.edu
- 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 American Opportunity 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 email@example.com
Further information can be obtained at the following links:
- 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.
- IRS Publication 970, Tax Benefits for Education, for use in preparing 2014 returns.
- IRS 2014 Form 8863
- Form 8863 Instructions