Taxpayers may be eligible to claim a nonrefundable
Hope Scholarship or Lifetime Learning Tax Credit to help them pay
for postsecondary education for themselves and/or their dependent
children. These tax credits can reduce the amount of federal income
Hope Scholarship Tax Credit. This tax credit
is available to a taxpayer for qualified tuition and related expenses.
It is available to parents of dependent students or to students
who are not claimed as dependents on their parents’ federal
tax return. A student must enroll at least half time during at least
one academic period during the tax year (January 1, 2004 - December
31, 2004). The Hope credit can be claimed only for two tax years
and applies only to the first two years of postsecondary
education. The tax credit is equal to all of the first $1,000 of
tuition and fees (less scholarships, grants, and tax-free tuition
benefits) and half of the next $1,000 of tuition and fees. The maximum
credit is $1,500. A student cannot have a drug felony conviction
in a year that the credit applies.
Lifetime Learning Tax Credit. This credit applies
to tuition and fees for undergraduate, graduate, and continuing-education
course work taken part time to improve or upgrade job skills. A
family can claim a credit equal to 20 percent of $5,000 of eligible
educational expenses paid after June 30, 1998, and prior to January
1, 2003, and up to 20% of $10,000 of eligible expenses paid after
January 1, 2003. The maximum benefit is $1,000 each tax year. Eligible
education expenses are reduced by scholarships, grants, and other
tax-free tuition benefits.
(Note: For both programs the credit is phased out for joint
filers adjusted for inflation. See the 2003 IRS Form 8863 for the
revised A61 limits.)
What You Need to Do:
For each tax year, keep copies of documents related to payment
of qualified tuition and fees, such as canceled checks or credit
card statements, financial aid awards, scholarships received,
and employer-paid tuition benefits.
Obtain relevant IRS forms and documents, such as IRS Publication
970, Tax Benefits for Higher Education. Telephone:
1-800-829-3676 for forms and 1-800-829-1040 for information.
Visit the IRS Web site at www.irs.ustreas.gov/hot/not97-601.html
or NVCC’s Web site at http://www.nvcc.edu/sis/web/default.htm
for more information.
For College reporting to the IRS, make sure that Admissions
and Records has an accurate social security number (SSN) or
individual taxpayer identification number (ITIN) and address
for you and any individual who can claim you as a dependent
on the federal tax return.
Send the Hope
Scholarship and Lifetime Learning Tax Credit Form in this
schedule, to the Admissions and Records Office at any campus.