In an effort to make college more affordable, Congress
included in the Taxpayer Relief Act of 1997 (TRA97): the Hope
Scholarship Tax Credit and the Lifetime Learning Tax Credit. By January
31st, the University will mail all students the information that they
need in order to apply for those credits.
Hope Scholarship tax credit: The Hope Scholarship provides tax credits
to taxpayers who pay qualified tuition and required fees for attending
college on at least a half-time basis. This credit is designed to offset
tuition costs incurred during the first two years of college. It may
only be used two years for any particular student. This credit is available
for tuition and required fees paid, minus certain grants, scholarships,
and other tax-free educational assistance. The maximum credit is $1650
per student.
Lifetime Learning Tax Credit: Like the Hope Scholarship credit, the
Lifetime Learning provides tax credits to taxpayers who pay qualified
tuition and required fees at an eligible institution. It differs from
the Hope scholarship in that the student is not required to be half
time. A family may claim a credit for up to $2000 per tax year . The
Lifetime Learning tax credit is available for tuition and required fees
less certain grants, scholarships and other tax-free educational assistance.
Both of these credits are limited by taxpayer income and are non-refundable
in that they only reduce tax liability.
Hope and lifetime learning credits. Beginning in 2007, the amount of your Hope or lifetime learning credit is gradually reduced (phased out) if your modified adjusted gross income (MAGI) is between $47,000 and $57,000 ($94,000 and $114,000 if you file a joint return). You cannot claim a credit if your MAGI is $57,000 or more ($114,000 or more if you file a joint return). This is an increase from the 2006 limits of $45,000 and $55,000 ($90,000 and $110,000 if filing a joint return). For more information, see chapters 2 and 3 of Publication 970.
Anyone planning to make use of these credits will need
much more specific information than is provided above. Listed below
are some sources of more detailed information:
1) IRS phone number: 800-829-1040
2) To download IRS publications or forms, please go
to:
http://www.irs.gov/formspubs/index.html
Enter 970
for the tax "publication" or 8863 for the tax "form".
University of Oregon employees cannot offer tax advice. However, if
you have questions about the information provided on the form 1098-T,
you may contact a University of Oregon representative after February
1st at (541) 346-3170 or email at:
jgates@uoregon.edu. You
may order a duplicate 1098-T by calling (541) 346-3160.
You should be aware that the law creating these credits requires the University to provide the name and social security number of all enrolled students to the IRS. It is important that the information be accurate. If we do not have your social security number, or if it is incorrect, you will need to complete IRS form W-9S, available at the University of Oregon Business Office, and submit it to the University.
Differences Between Hope and Lifetime Learning Tax Credits
Who Does Benefit?
| HOPE CREDIT | LIFETIME LEARNING CREDIT |
| Up to $1,650 credit per eligible student | Up to $2,000 credit per return |
| Available ONLY until the first 2 years of postsecondary education are completed | Available for all years of postsecondary education and for courses to acquire or improve job skills |
| Available ONLY until the first 2 years of post-secondary education are completed. | Available for an unlimited number of years |
| Student must be pursuing an undergraduate degree or other recognized education credential | Student does not need to be pursuing a degree or other recognized education credential |
| Student must be enrolled at least half time for at least one academic period beginning during the year | Available for one or more courses |
| No felony drug conviction on student's record | Felony drug conviction rule does not apply |
Who can claim the credit?
Generally, you can claim the Hope credit or Lifetime Learning Credit if all three of the following requirements are met:
Who cannot claim the credit?
You cannot claim the Hope credit or Lifetime Learning Credit for 2007 if any of the following apply:
Your filing status is married filing separately.
You are listed as a dependent in the Exemptions section on another person's tax return (such as your parents').
Your modified adjusted gross income (MAGI) is $114,000 or more if married filing jointly, or $57,000 or more if single, head of household, or qualifying widow(er).
You (or your spouse) were a nonresident alien for any part of 2007 and the nonresident alien did not elect to be treated as a resident alien for tax purposes. More information on the nonresident aliens can be found in Publication 519, U.S. Tax Guide for Aliens.
You claim the lifetime learning credit or a tuition and fees deduction for the same student in 2007.
Student Loan Interest Deduction
Income limits increased. The amount of your student loan interest deduction for 2007 is gradually reduced (phased out) if your modified adjusted gross income (MAGI) is between $55,000 and $70,000 ($110,000 and $140,000 if you file a joint return). You cannot take a deduction if your MAGI is $70,000 or more ($140,000 or more if you file a joint return). This is an increase from the 2006 limits of $50,000 and $65,000 ($105,000 and $135,000 if filing a joint return).
Generally, personal interest you pay, other than certain mortgage interest, is not deductible on your tax return. However, if your modified adjusted gross income (MAGI) is less than $70,000 ($140,000 if filing a joint return) there is a special deduction allowed for paying interest on a student loan (also known as an education loan) used for higher education. For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return before subtracting any deduction for student loan interest. This deduction can reduce the amount of your income subject to tax by up to $2,500 in 2007. The student loan interest deduction is taken as an adjustment to income. This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040).
Student Loan Interest Deduction at a Glance
Do not rely on this table alone. Refer to Chapter 4 of Publication 970 for complete details.
| Feature | Description |
| Maximum Benefit | You can reduce your income subject to tax by up to $2,500. |
| Loan Qualifications | Your student loan: - must have been taken out solely to pay qualified education expenses, and - cannot be from a related person or made under a qualified employer plan |
| Student Qualifications | The student must be: - you, your spouse, or your dependent, and - enrolled at least half-time in a degree program. |
| Time limit on deduction | You can deduct interest paid during the remaining period of your student loan. |
| Phase out | The amount of your deduction depends on your income level. |
Student Loan Interest Deduction Reporting Requirement * (Refer to latest IRS Notice 98-7)