Loans and Taxes
The Federal government offers a number of lucrative tax credits designed to help students offset the cost of their post-secondary education. The HOPE Scholarship Tax Credit, like the American Opportunity and Lifetime Learning Education credits, allows students and their families to receive $2500 in tax relief on their annual Federal tax returns in order to defray the costs of college tuition. Eligible working students and their families can avail themselves of this tax credit during the first four years of their college education. Taxpayers whose total tax liability does not fully offset the available tax credit, may also be eligible for a partial refund of the balance of their HOPE tax credit allowance.
The HOPE Scholarship Tax Credit is a program developed by the Federal government to help college-bound students afford a post-secondary education. Students otherwise ineligible for scholarships or grants, can claim a much needed tax credit, up to $2500, on their yearly Federal income taxes. The credit allowed is a percentage of the total yearly education costs paid by the taxpayer, their spouse or dependent students. Currently the HOPE Scholarship Tax Credit allows a credit of 100% of the first $2000 of tuition costs, plus an additional 25% of the second $2000. By offering this tax credit, the Federal government hopes to encourage and support young students as they embark on their college careers, and to make post-secondary education more accessible to all students.
Students and their families wishing to take advantage of the HOPE Scholarship Tax Credit must file an annual Federal tax return. The filing taxpayer must be either the student, or someone who can claim the student as a dependent. Income restrictions apply; taxpayers filing single returns must have an income that does not exceed $55,000, while those filing joint returns must have an annual income of less than $110,000. Eligible students must be enrolled in a degree or certification program at an accredited school, and must be attending classes at least part time.
Taking advantage of the HOPE Scholarship Tax Credit is easy, and the forms needed are available form the IRS or from the university's financial aid department. To apply for this credit simply report any and all tuition fees and related college attendance costs during the calendar year for which you are filing. Your college will supply you, and the government, with the pertinent information on a form called the 1098-T. Use this information to fill out form 8863 to be filed with your yearly Federal tax return. Some taxpayers may find it beneficial to consult a tax adviser or personal accountant when filing.
For students and their families struggling to find the funds to pay for a college education, the HOPE Scholarship Tax Credit is a definite boon. This program continues to help hard working people afford, and benefit from, a post-secondary education,