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
tax.
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, 2005 - December 31, 2005). The Hope credit
can be claimed only for two tax years and applies only to the first two yearsof 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 been convicted of a drug felony in a year that the credit
applies. The exact amount of the credit depends on your family’s income,
the amount of qualified tuition and fees paid, and the amount of certain scholarships
and allowances subtracted from tuition. The College will mail a 1098-T form to
IRS and to students. The form provides a telephone number if you have questions.
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 of up to 20% of $10,000 of
eligible expenses paid after January 1, 2005, making the maximum
benefit $2,000. The Lifetime
Credit is available for an unlimited number of years. Eligible education expenses
are reduced by scholarships, grants, and other tax-free tuition benefits.
(Note: the credit is phased out for joint filers adjusted for
inflation. See the current IRS Form 8863 for the revised AGI limits.)
What You Need to Do:
-
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 for each tax year. You may reference some
of this information on NovaConnect at http://www.nvcc.edu/novaconnect/.
-
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.gov/pub/irs-pdf/p970.pdf or NVCC’s Web site at http://www.nvcc.edu/depts/accounting/taxes/Tax%20Credit%20Information.htm for more information.
-
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 for College
reporting to the IRS.
-
Update your mailing address on NovaConnect no later than
December 31, 2005, to receive a copy of IRS 1098-T reporting
form.
|