The Taxpayer Relief Act of 1997 (TRA97)

Texas State University-San Marcos has contracted with a specialized vendor to provide students a 1098-T tax form, financial addendum, and informational brochure. This packet of information will be mailed to students no later than February 1st following each tax year. Please visit the Tax Credit Reporting Service website at http://www.1098-T.com to view or reprint your 1098-T form and financial addendum. Other related links can be found at the bottom of this page.

The Taxpayer Relief Act of 1997 may offer you the opportunity for tax savings through the following:

Hope Scholarship Tax Credit

Lifetime Learning Tax Credit

Student Loan Interest Deduction

Please note that the Hope credit is actually a tax credit and not a scholarship. Tax credits and interest deductions are subtracted directly from the tax a family owes to the Internal Revenue Service and will NOT appear on your billing statement from Texas State University.

Texas State University's intent is not to offer tax advice but to alert students and parents of the potential tax credit. Please contact a tax professional or the IRS at (800) 829-1040 or the IRS Office of Public Liaison at (202) 622-2970 for details.

More Information:

IRS Tax Information for Students

Tax Benefits for Education

NACUBO TRA97 Student Resource Page

The Hope Scholarship Credit

The Hope Scholarship Credit is for students who are enrolled in one of the first two years of post-secondary education and are carrying at least a half-time workload while pursuing an undergraduate degree, certificate, or other recognized credential.

The Hope Scholarship Credit is available to eligible taxpayers on a per-student basis for the first two years of post-secondary education. You are eligible if you have qualified expenses paid in 2004 as a student enrolled at or attending an eligible educational institution. You cannot claim credits if your filing status is married and filing separately or you are claimed as a dependent on another person's tax return (such as your parents’ return). The full amount of the Hope Scholarship Credit is available to married taxpayers filing jointly with an adjusted gross income (AGI) of $105,000 or less and to single taxpayers with an AGI of $52,000 or less. Married taxpayers with a combined AGI of $105,000 or greater (and single taxpayers with an AGI of $52,000 or greater) are ineligible for this credit.

The amount that may be claimed as a credit is generally equal to: (1) 100 percent of the first $1,000 of the taxpayer’s out-of-pocket expenses for each student’s qualified tuition and related expenses; plus (2) 50 percent of the next $1,000 of the taxpayer’s out-of-pocket expenses for each student’s qualified tuition and related expenses. Thus, the maximum credit a taxpayer may claim for a taxable year is $1,500 multiplied by the number of students in the family who meet the eligibility requirements described above. Qualified tuition and related expenses are tuition and fees a student must pay to be enrolled at or attend an eligible educational institution.

The following are not qualified tuition and related expenses: (1) amounts paid for any course or other education involving sports, games or hobbies (unless the course or other education is part of the student's degree program); (2) charges and fees for room, board, student activities, athletics, insurance, books, equipment, transportation (and similar personal, living or family expenses). Please refer to the "Definitions" under "TRA ’97 Information" portion of the www.tcrs.com Web site to verify that your expenses qualify. If you or the student claim a deduction for higher education expenses, such as on Schedule A or Schedule C (Form 1040), you cannot use those expenses when figuring your education credits. Also, higher education expenses paid with a tax-free scholarship, Pell Grant or employer-provided educational assistance cannot be used when figuring your education credits. Eligible expenses for this credit are offset by scholarships, grants, and other tax-free tuition benefits. Nonresident aliens generally are ineligible to claim the Hope Scholarship Credit.

The Hope Scholarship Credit is nonrefundable. If the taxpayer is claiming a Lifetime Learning Credit for a particular student, none of that student’s expenses for that year may be applied toward the Hope Scholarship Credit.

For more information about the Hope Scholarship Credit, call the IRS at 1-800-TAX-1040 or visit their web site at www.irs.gov.

Lifetime Learning Credit

The Lifetime Learning Credit is offered to encourage people to improve or acquire new job skills. This credit applies to tuition and fees for undergraduate, graduate, and continuing-education courses. Qualified tuition and related expenses are tuition and fees a student must pay to be enrolled at or attend an eligible educational institution. The following are not qualified tuition and related expenses: (1) amounts paid for any course or other education involving sports, games or hobbies (unless the course or other education is part of the student's degree program); (2) charges and fees for room, board, student activities, athletics, insurance, books, equipment, transportation (and similar personal, living or family expenses). If you or the student claim a deduction for higher education expenses, such as on Schedule A or Schedule C (Form 1040), you cannot use those expenses when figuring your education credits. Also, higher education expenses paid with a tax-free scholarship, Pell Grant or employer-provided educational assistance cannot be used when figuring your education credits. Part-time and full-time students are eligible for the Lifetime Learning Credit. Unlike the Hope Scholarship Credit, you are not required to be enrolled at least half-time in one of the first two years of post-secondary education. You may be eligible to receive a partial credit, even if you are taking only a single course at a community college.

You are eligible for the Lifetime Learning Credit if you have qualified expenses paid in 2004 as a student enrolled at or attending an eligible educational institution. The full amount of the Lifetime Learning Credit is available to married taxpayers filing jointly with an adjusted gross income (AGI) of $105,000 or less and to single taxpayers with an AGI of $52,000 or less. Married taxpayers with a combined AGI of $105,000 or greater and single taxpayers with an AGI of $52,000 or greater are ineligible for these credits. You cannot claim credits if your filing status is married and filing separately or you are claimed as a dependent on another person's tax return (such as your parents’ return). Taxpayers cannot use both the Hope Scholarship and Lifetime Learning Credits for the same student in a single year.

The amount that may be claimed as a credit is equal to 20 percent of the taxpayer’s first $10,000 of out-of-pocket qualified tuition and related expenses for all the students in the family.  The maximum credit a taxpayer may claim for a taxable year is $2,000. These amounts are not indexed for inflation. Eligible expenses for this credit are offset by scholarships, grants, and other tax-free tuition benefits.  This credit may be claimed for an unlimited number of years.

The Lifetime Learning Credit is nonrefundable. If the taxpayer is claiming a Hope Scholarship Credit for a particular student, none of that student’s expenses for that year may be applied toward the Lifetime Learning Credit.

For more information about the Lifetime Learning Credit, call the IRS at 1-800-TAX-1040 or visit their web site at www.irs.gov.

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). See Effect of the Amount of Your Income on the Amount of Your Credit, later, for more information.

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).

FAQ - Frequently Asked Questions

Can I view my 1098-T online?

What is Form 1098-T? (Tuition Payments Statement)

What do the amounts located on the form represent?

Why don’t the amounts shown on my 1098-T match the amounts we were charged for tuition last year?

Where are the payments we made for the Spring semester?

What are Qualified Tuition and Expenses?

What are Non-Qualified Expenses?

Who can claim a Hope or Lifetime Learning Tax Credit or the Higher Education Tuition and Fees Deduction?

I paid my qualified tuition and expenses with student loans or scholarships. Can I still claim a Hope or Lifetime Learning Credit or the Higher Education Tuition and Fees Deduction?

How do I claim a credit or deduction?

Where was my form mailed?

Can I get another form mailed to me?

Why didn’t I receive a 1098-T in the mail?

What do I do if I didn't get a 1098-T?

When I go online and access my record, my record only shows “The 1098-T information is not available”

Who prepared Form 1098-T?

If I receive Form 1098-T, does it mean I qualify for the Hope Scholarship or Lifetime Learning Tax Credits?

There are prior year adjustments on the form (Box 3 and 5) but these fields have not been populated on past forms. Why?

I took non-credit courses last year that were required by the university before I could enroll. Why are these amounts not shown on the 1098-T?

The information on my 1098-T form is incorrect. Can I get this form corrected and resubmitted?

What was I billed for tuition in the prior calendar year?

What if I have further questions?

Can I view my 1098-T online?

Your 1098-T form and financial information will be available online after January 31st. To have your 1098-T sent electronically to you via email, go to the following website and follow the instructions below. Once you are able to access your records, you will see an option to “Receive 1098-T Forms Electronically”. You will check the box “ Texas State ” and write in the email address that you want the form sent to.

To access your 1098-T report, follow these steps:

http://www.1098T.com

1. Click on “Access My Record”.
2. Enter the Social Security Number and the Last Name of the Student.
3. If you don’t have a PIN number, leave PIN blank and click on “Log in”. You will be prompted to create a PIN number.
4. To create a PIN number, you’ll need First Name of student, Mother’s maiden name, and student’s birthday.
5. You will create a 4 digit PIN number, and click “Finish”
6. Click on the View My 1098-T form link to view the front of the form. The link is located on the left side of the screen.
7. If you get the message “Form is not available” you may not have paid any tuition payments in the prior calendar year. You can access other calendar years on this website.
8. Click on the View My Financial Information link to view the back of the form. The link is located on the left side of the screen.
9. When you view the back of the form, you will see that there are underlined and highlighted areas. Click on any underlined link to view details.
10. To print the form and any details use the Print options available.

What is Form 1098-T? (Tuition Payments Statement)

Form 1098-T is provided to help you determine if you are eligible to claim a Hope Scholarship or Lifetime Learning Credit on your income tax return. If you are claimed as a dependant on someone else’s tax return, they might be eligible to receive the credit(s).

What do the amounts located on the form represent?

Box 1 represents the amount of qualified tuition paid on a cash basis (not billed) at Texas State for the prior calendar year from January 1 through December 31. For example, amounts that were paid in December for the Spring semester will appear on the 1098-T for the calendar year that December falls in. You can view these details on page 2 of the 1098-T form by going online to www.1098t.com and viewing the “Financial Information” link on the webpage. Click on any underlined amounts on that page, and you will see details that represent that amount.

Box 4 represents the total of all scholarships or grants administered and processed by the eligible educational institution. The amount of scholarships or grants for the calendar year reduce the amount of any allowable tuition and fees deduction or the education credit you may claim for the year.

Box 6 is checked if the student has paid during the calendar year for a future semester. (For example, payment is made in December for the subsequent Spring semester.)

Box 8 is checked if you have been a student for 6 credit hours (half time) or more for one academic period that began during the calendar year.

Why don’t the amounts shown on my 1098-T match the amounts we were charged for tuition last year?

Texas State reports the amounts that you paid during the calendar year, not the amounts billed. The IRS requires that the University choose one of two possible reporting methods, cash or accrual. Texas State reports on a cash basis.

Where are the payments we made for the Spring semester?

Texas State University reports the total amount of payments received during the calendar year. If payments for Spring were made in December, the payments will be included in the 1098-T form for December’s calendar year.

What are Qualified Tuition and Expenses?

Qualified higher education expenses means tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution that were paid from Jan 1 to December 31 of the tax year.

http://www.irs.gov/taxtopics/tc313.html

What are Non-Qualified Expenses?

The University counts as non-qualified expenses room and board, student activities, courses not required for the degree program, insurance, equipment, transportation, or other similar personal, living or family expenses.

Who can claim a Hope or Lifetime Learning Tax Credit or the Higher Education Tuition and Fees Deduction?

An eligible taxpayer who incurred the cost of the qualified tuition payments may claim them. An eligible taxpayer may be the student or, if the student is a dependent for federal income tax purposes, the person (e.g., parent) claiming the student as a dependent. A student who is a dependent cannot claim the tax credits or deduction on his or her own tax return.

If an employee of the university has tuition or fees paid by the university, the employee cannot claim the tuition or fees paid by the university as a tax credit or deduction even if the tuition or fees paid by the university is included on the 1098-T.

I paid my qualified tuition and expenses with student loans or scholarships. Can I still claim a Hope or Lifetime Learning Credit or the Higher Education Tuition and Fees Deduction?

Loan funds should be considered in the same manner as cash payments when calculating a Hope or the Lifetime Learning Tax Credit or the Higher Education Tuition and Fees deduction. However, any scholarships, grants, or other non-taxable aid must be deducted from the amount of qualified tuition and related expenses paid to calculate the education credits or deductions.

How do I claim a credit or deduction?

The university cannot advise students on the preparation of their tax return. Information for calculating a credit or deduction can be found in IRS Publication 970, which is available at www.1098T.com or www.irs.gov.

Where was my form mailed?

Texas State mailed the 1098-T forms based on the address provided by the students to the Registrar’s Office. Forms were mailed to permanent addresses if available. If you opted for electronic delivery you would not have received in the mail.

Can I get another form mailed to me?

No, we are not able to re-mail the forms to you. You can access these forms via the website listed below.

Why didn’t I receive a 1098-T in the mail for this tax year?

There are several possibilities: 1) You attended Texas State in the spring semester of that calendar year but you paid the tuition and fees in December of the prior calendar year. 2) Your mailing address or permanent address on file is incorrect. 3) Your tuition amounts consisted of only non-credit courses. 4) You opted for electronic delivery of your 1098-T form. 5) You do not have a valid SSN or Taxpayer ID on file with the Registrar’s Office.

What do I do if I didn't get a 1098-T?

If you did not receive a form and should have, you can print your form online by going to www.1098t.com.

When I go online and access my record, my record only shows “The 1098-T information is not available”

The system creates this message when there is no information to display. The student did not pay any amounts during the calendar year, but likely paid amounts in December of the prior year for the calendar year reported.

Who prepared Form 1098-T?

Various offices provide data to our third-party vendor, ACS, which in-turn prepares the 1098-T forms for printing and online presentment.

If I receive Form 1098-T, does it mean I qualify for the Hope Scholarship or Lifetime Learning Tax Credits?

Not necessarily, the University is required to provide Form 1098-T to individuals who paid for qualified tuition and fees during the prior calendar year. Please consult with a qualified tax preparer or CPA to make an individual determination.

There are prior year adjustments on the form (Box 3 and 5) but these fields have not been populated on past forms. Why?

Beginning in tax year 2004, educational institutions must also report certain amounts to the IRS pertaining to prior year reductions to qualified tuition and related expenses as well as reductions to scholarship and/or grant amounts for a prior year.

I took non-credit courses last year that were required by the university before I could enroll. Why are these amounts not shown on the 1098-T?

The university does not generate 1098-T information for non-credit courses, even if they were required by the university.

The information on my 1098-T form is incorrect. Can I get this form corrected and resubmitted?

The information on the 1098-T form comes directly from the student’s records at the university and should be correct. The university will not alter or reprint any 1098-T forms. Financial information can be found on the university’s website under “Financial Aid and Scholarships” and the “My Financial Aid” link. Each student can access this information.

What was I billed for tuition in the prior calendar year?

Please refer to receipts and bills from the university for this information. If you need more detail, you can view details of your financial transactions online by accessing your records via CATSWEB. Go to “Student Services” then to “Financial Information”.

What if I have further questions?

Texas State University has sent the forms in compliance with IRS guidelines. However, we can not offer any tax advice on this issue. If you have further questions, please utilize the resources at the links below.

For additional information, please consult the following:

www.1098t.com (See instructions above)

www.irs.gov : Find Form 8863 on the IRS website to calculate education tax credits.

TeleTax Topics: Listen to pre-recorded messages covering tax information by calling: 1-800-829-4477. Topic 605 is Education credits.

Internal Revenue Service: 1-800-829-1040 To obtain tax forms 1-800-829-3676.

Student Business Services: To clarify information related to tuition and fee payments, billing and third-part gift aid and adjustments.

Registrar’s Office: To explain how to provide or correct your social security number and to make updates to students' addresses in the mainframe.

Financial Aid Office: To clarify information related to gift aid, scholarships, grants, loans and gift aid adjustments.

Business College Volunteers: Volunteers will be available as announced from the Business College on campus to assist students in filing their federal tax return.

The University WILL NOT provide:

• Tax advice or guidance.
• Corrected or amended 1098-T reports.
• Information on other education credits that were part of the Taxpayer Relief Act of 1997 or subsequent amendments.