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1098-T and the Hope Education Credit

July 2nd, 2010 2 comments

Form 1098-T is an information return used by educational institutions to report student information to the IRS. The form has information about the student including the student’s name, taxpayer identification number, address, academic status, and enrollment. The form also includes information about qualified educational expenses such as tuition and related expenses, and information on scholarships and grants that the student has received.

Every student that meets the reporting requirements for Form 1098-T must have an information return filed for them by their educational institution. A student can request a copy of their 1098-T from their institution and use the information to help them claim tax credits. The 1098-T information return does not have all of the information that is required to claim the credit, but it offers some of the required information.

Claiming the tax credit is not required by students. Students similarly are not required to file Form 1098-T but they may request a copy to help them apply for tax credits or have the information for their own financial records. The Hope Education Credit, American Opportunity Credit (an extension of the Hope Credit), and Lifetime Learning Credit are three educated related tax credits that students may qualify for.

Essentially, the credit is mostly to relieve the tax burden on parents and students who are not dependents of others who are paying for their own education. There are several requirements for the credit for both taxpayers and the student whose qualified expenses that the credit is being claimed for. Students may also claim the credit for their own taxes if they are not dependents of others.

Students can qualify for the Hope Education Credit if the meet certain requirements. The Hope Credit offers up to a $1650 tax credit for qualified students. The credit is claimed for expenses paid for by the taxpayer, the taxpayer’s spouse, or a dependent of the taxpayer.

The American Opportunity Credit extends the Hope Credit for up to $2,500 as a credit instead of $1650. The student for whom the credit is claimed can be enrolled up to 4 years instead of 2. Also, up to 40% of the credit is refundable. The American Opportunity Credit is available since the year 2009.

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