Taxpayer Relief Act of 1997
Information on Education Tax Credits
In an effort to make college more affordable, Congress passed the Taxpayer Relief Act of 1997 (TRA97) and the American Recovery and Reinvestment Act of 2009 (ARRA) establishing the Lifetime Learning Tax Credit and the American Opportunity Credit. Both of these credits are limited by taxpayer income. If students are eligible, they will need the information reported onForm 1098-Tto help compute these credits. Southern Oregon University mails this form to all students by January 31 of the following calendar year. This information is also available on InsideSOU on January 31 after the end of the tax year.
American Opportunity Tax Credit
The American Opportunity Credit provides a tax credit to taxpayers who pay qualified tuition and related expenses (including books) for attending an eligible institution for at least one term on at least a half-time basis. This credit is designed to offset tuition costs incurred during the first four years of college. The individual tax filer can use it for only four years for each eligible student. This credit is computed on qualified tuition and related expenses (including books) paid during the calendar yearminus certain grants, scholarships, and other tax-free educational assistance.The maximum tax credit is $2,500 per student and 40% of this credit is refundable for most taxpayers. This means you can get money back even if you owe no taxes. If you qualify, this credit can be claimed on your federal tax return. For more information about this tax credit, you can visit the ARRA information center atirs.govor call 1.800.829.1040 .
Lifetime Learning Tax Credit
Like the Hope Scholarship Credit, the Lifetime Learning Credit provides a tax credit to taxpayers who pay qualified tuition and related expenses to an eligible institution. It differs from the Hope Scholarship: the student is not required to attend at least half time. A family may claim a credit of up to $2,000 per tax year. The Lifetime Learning tax credit is available for tuition and related expenses paid during the calendar yearminus certain grants, scholarships, and other tax-free educational assistance.
Are you eligible for a tax credit?
You may be eligible for a tax credit for tuition paid, minus certain financial aid received. IRS regulations limit eligibility based on hours completed, hours enrolled, and income of the taxpayer. Be sure to read “Instructions for Student” on your hard-copyForm 1098-T. Contact your tax preparer, call the IRS (800-829-1040), and/or consultIRS Publication 970, “Tax Benefits for Education.”
If you decide to claim education tax credits, you will need to completeIRS Form 8863.
Form 1098-T and your SOU Account
The information reported on Form 1098-T refers to all activity that posted onto your SOU account in the calendar year indicated on the form. Note: calendar year activity will include all charges and payments for the winter, spring, summer and fall terms plus any amount charged at the end of the calendar year (i.e. in December) for the following winter term.
SOU reports the “Amountspaid for qualified tuition and related expenses” in Box 1. We are required to report information for “Adjustments made for a prior year” in Box4 and “Adjustments to scholarships or grants for a prior year” in Box 6. If your Form 1098-T displays figures in Boxes4 and/or 6, be sure to read the information about these boxes on the back of the Form 1098-T.Scholarships and grants are reported in box 5.
Southern Oregon University mails this form to all students no later than January 31st of the following calendar year.
Online Access
You can view a representation of this form and get additional detail about your SOU account online starting on January 31:
- Log on toInsideSOU
- Click on the Student and Registration tools in the online service box
- In the billing account box, click on Tax Notification
- Enter the tax year
- Click the Submit button
If you have questions about the information provided on the Form 1098-T contact:
Southern Oregon University
Raider Student Services, Computing Services Building
Phone: 541.552.6598
Fax: 541-552-6614
E-mail:studentservices@sou.edu
Social Security Number
SOU is required to provide the IRS the name and social security number of all enrolled students who take a class for credit. If the social security number is incorrect, you will need to complete IRS Form W-9S and submit the form to Southern Oregon University, Raider Student Services Office, Computing Services Building, 1250 Siskiyou Blvd., Ashland, OR 97520.
Tax Advice
SOU cannot provide tax advice.
Be sure to read “Instructions for Student” on your hard-copy of Form 1098-T.
If you have tax-related questions:
- contact your tax preparer
- call the IRS (800-829-1040)
- and/or consult IRS Publication 970, “Tax Benefits for Education.”
IRS Forms
If you decide to claim education tax credits, you will need IRS Form 8863.
If your social security number is incorrect on Form 1098-T, you need IRS Form W-9S.
FAQs
Who can claim an education credit? There are additional rules for each credit, but you must meet all three of the following for both: You, your dependent or a third party pays qualified education expenses for higher education. An eligible student must be enrolled at an eligible educational institution.
How do I get the full $2500 American Opportunity Credit? ›
Be pursuing a degree or other recognized education credential. Have qualified education expenses at an eligible educational institution. Be enrolled at least half time for at least one academic period* beginning in the tax year. Not have finished the first four years of higher education at the beginning of the tax year.
What are education credits from IRS? ›
Education credits are amounts that will reduce the amount of tax due. The amount is based on qualified education expenses that the taxpayer paid during the tax year. There are two different education credits: the American opportunity credit and the lifetime learning credit.
Why don't I qualify for education tax credit? ›
You may not qualify for an education tax credit if you earn more than the income limits, if you didn't pay the educational expense you're claiming the credit for, if someone else can claim you as a dependent for tax purposes, or if your tax filing status is married filing separately.
Do college students get $1000 back on taxes? ›
The AOTC is a tax credit worth up to $2,500 per year for an eligible college student. It is refundable up to $1,000. If you are a college student filing your own return, you may claim this credit a maximum of four times (i.e. once per year for four years).
What education is tax deductible? ›
You can deduct the costs of qualifying work-related education as business expenses. This is education that meets at least one of the following two tests: The education is required by your employer or the law to keep your present salary, status or job.
What would disqualify you from claiming the American Opportunity Credit? ›
You can't take the AOTC if any of the following apply: Your filing status is married filing separately (MFS). You are claimed as a dependent on another person's tax return (such as the taxpayer's parents' return).
Why only $1,000 for American Opportunity Credit? ›
The 1000 came from the 8863. While the total amount of the AOC is worth up to $2,500, only $1,000 of the AOC is actually refundable. This means you can use the other portion to reduce your tax liability if you have any. But, only $1,000 can be directly added to your refund without any tax liability.
What is the income limit for American Opportunity Credit? ›
Taxpayers with a modified adjusted gross income of $80,000 or less ($160,000 or less for joint filers) are potentially eligible for the full credit and the credit is reduced ratably up for modified adjusted gross incomes up to $90,000.
How do I know if I qualify for education credit? ›
To qualify for the Lifetime Learning Credit, you must meet the following criteria, according to the IRS: Be enrolled or taking courses at an eligible educational institution. Be taking higher education courses to get a degree or other recognized education credential or to get or improve job skills.
Q11. How do I calculate AOTC? A11. You calculate the AOTC based on 100 percent of the first $2,000 of qualifying expenses, plus 25 percent of the next $2,000, paid during the tax year.
What is the IRS education credit limit? ›
You can get a maximum annual credit of $2,500 per eligible student. If the credit brings the amount of tax you owe to zero, you can have 40 percent of any remaining amount of the credit (up to $1,000) refunded to you.
What two tax credits could be claimed? ›
You can claim both the American opportunity credit and the lifetime learning credit on the same tax return, but you can't claim both for the same student.
What are the limitations for education tax credit? ›
There is no limit on the number of years you can claim the credit. It is worth up to $2,000 per tax return.
Why can't I deduct my tuition? ›
You're ineligible for the tuition and fees deduction if you and your spouse are filing separate tax returns or you were a nonresident alien for part of the tax year. You can't claim the tax break if your income is higher than a certain threshold either.
Who qualifies for an educator tax credit? ›
To be able to write off up to $300 of your unreimbursed out-of-pocket classroom expenses, you need to be an “eligible educator.” For tax purposes, an eligible educator is anyone who is a teacher, instructor, counselor, principal, or aide at a school for kindergarten through twelfth grade.
Is college tuition tax-deductible for parents? ›
College tuition is no longer directly tax-deductible for parents in the U.S. as of the 2021 tax year. Before the Fees and Tuition Deduction was repealed, taxpayers could deduct up to $4,000 higher education expenses.
Why is my education credit only $1000? ›
The 1000 came from the 8863. While the total amount of the AOC is worth up to $2,500, only $1,000 of the AOC is actually refundable. This means you can use the other portion to reduce your tax liability if you have any. But, only $1,000 can be directly added to your refund without any tax liability.
