University of Hawai'i
(808) 956-8856 Telephone
For Immediate Release:
October 6, 1997
|Contact: Cheryl Ernst, (808) 956-5941|
Information on the Hope Scholarship
This information was culled from the Web pages of the National Association of Student Financial Aid Administrators (www.nasfaa.org/doclib/html/gov/gov/gtax829.html) and the American Association of Community Colleges (www.aacc.nche.edu). It is not to be construed as tax advice or counsel.
What is the Hope Scholarship Tax Credit?
Not technically a "scholarship," the Hope tax credit provides eligible taxpayers with a federal income tax credit of up to $1,500 per student per year (100 percent of the first $1,000 plus 50% of the next $1,000 of qualified tuition and related expenses) for the first two years of postsecondary education. Credits are for expenses paid on or after Jan. 1, 1998, for a student who is enrolled at least half-time (a minimum of six credits per term) and is not convicted of a felony drug offense.
What is the Lifetime Learning Tax Credit?
Students not eligible for Hope credit may file for the Lifetime Learning benefit, which allows a tax credit of up to $1,000 for qualified tuition and expenses after June 30, 1998. The credit is limited to a maximum of $1,000 per taxpayer return, but may be claimed for an unlimited number of years.
What are "qualified tuition and related expenses?"
They are tuition and fees required for enrollment or attendance by the taxpayer, taxpayer's spouse or dependent. Book costs, activity fees, insurance expenses and room and board are not included. Qualified tuition and fees must be reduced by the amount of any scholarships, fellowship grants or other tax-free educational benefits received.
Are there other eligibility requirements?
Yes. Students must have a high school diploma or equivalent and be enrolled in a degree, certificate or other program that leads to a recognized education-al credential. Unclassified students are not eligible.
Does everyone qualify?
No. Both tax credits are "non-refundable." That is, they are not available to anyone who does not have a federal income tax liability. Also, the tax credit is phased out for single taxpayers earning $40,000$50,000 and joint filers earning $80,000$100,000. A taxpayer who claims either a Hope credit or an exclusion for certain distributions from an educational IRA for a student cannot also claim a Lifetime Learning credit for that student for that tax year.
Who can claim eligible expenses?
The taxpayer, taxpayer's spouse or a dependent. For dependent students, credits are allowed only if the student is claimed by a taxpayer as a dependent during the tax year for which the credit is claimed.
Have spring tuition payment deadlines been adjusted for the semester beginning Jan. 12, 1998 to allow students to claim the tax credit? Manoa, Hilo and Community Colleges campuses will allow a one-time-only delay for payments so students can take advantage of the Hope tax credit for spring 1998.
Revised deadlines are:
Jan. 5 for Kapi'olani CC, Windward CCs
Jan. 6 for Leeward CC, Maui CCs
Jan. 7 for Kaua'i CC
Jan. 8 for Honolulu CC
Jan. 9 for Hawai'i CC and UH Hilo
Jan. 26 for UH Manoa
UH West O'ahu students do not qualify for the Hope tax credit because the campus enrolls only upper division students and the Hope credit is restricted to freshmen and sophomores. UH West O'ahu payment deadlines are Jan. 68, 1998.
How do taxpayers obtain the Hope tax credit?
By filing federal income tax documents. Details are still being worked out, but families may be asked to complete a tax form similar to those used to report dividend income or claim child care expenses. Institutions may issue reports to the student, taxpayer and the Treasury Department and may need to collect additional information. UH students who receive correspondence requesting information are advised to respond as quickly as possible.
Are there other new federal educational tax benefits?
Yes. Additional tax benefits include:
· An exemption of employer-provided assistance under Section 127 of the IRS Code.
· Deduction of interest on educational loans.
· Penalty-free withdrawals from individual retirement accounts to pay for higher education.
· Contributions to educational IRAs for children under age 18.
How do I get more information?
The U.S. Department of Treasury and Department of Education have announced that a guide for families will soon be available. It is to be posted on the U.S. DOE Web site (www.ed.gov) or can be requested by calling the College Board's Washington Office at (202) 822-5900. Families should consult their tax advisers or preparers for specific information about their situations.