The Internal Revenue Code provides both tax credits and deductions that may be taken to reduce the federal income tax burden for students or those paying the costs of a student’s higher education. Briefly, credits directly reduce the amount of income tax owed, while deductions reduce the amount of taxable income upon which income taxes are computed. Per IRS regulation, WWU reports all tuition charges, financial aid, grant or scholarship payment information for students on the 1098T (see below).
In January of each year, Western Washington University provides IRS Form 1098-T to all students who had qualified tuition and other related educational expenses billed to them during the previous calendar year. This form is informational only and should not be considered as tax opinion or advice. It serves to alert students that they may be eligible for federal income tax education credits. Receipt of Form 1098-T does not indicate eligibility for the tax credit. To determine the amount of qualified tuition and fees paid, and the amount of scholarships and grants received, a taxpayer should use their own financial records.
For questions on the amounts shown on Form 1098-T, contact the Student Business Office at 360-650-2865. Consult with your tax advisor for questions regarding eligibility requirements and calculation of any allowable education tax credit.
Yes. Section 6050S of the Internal Revenue Code, as enacted by the Taxpayer Relief Act of 1997, requires institutions to file information returns to assist taxpayers and the Internal Revenue Service in determining eligibility for the Hope and Lifetime Learning education tax credits.
You do not need to file the 1098T form with your tax return. All you need is the information that the form contains.
You can get the information by logging into Web4U. Just check your Student Account Online page and a link is provided in the 1098-T section.
The IRS instructs institutions to report either payments received (Box 1) or amounts billed for qualified tuition and related expenses (Box 2) on the 1098-T. Once an institution has selected one of these options, they cannot change reporting methods between calendar years without IRS permission. WWU reports qualified tuition and related expenses that were billed during the tax year (Box 2) and scholarships and grants, therefore, Box 1 – Payments Received for Qualified Tuition and Related Expenses, will be blank.
American Opportunity Tax Credit
This new education tax credit is available for 2009 through 2012 (expanded from the formerly existing Hope credit).
Applies to the first four years of post-secondary education
Tax credit of up to $2,500 of the cost of qualified tuition and related expenses paid during the taxable year
Based on 100% of the first $2,000, plus 25% of the next $2,000 of tuition, fees, and course materials paid during the taxable year
Qualified tuition and related expenses has been expanded to include expenditures for “course materials”
Eligibility is limited to taxpayers with adjusted gross income of $90,000 or less ($180,000 or less for joint filers)
Lifetime Learning Credit
The Lifetime Learning Credit may be claimed for the qualified tuition and related expenses of the students in the taxpayer’s family (i.e., the taxpayer, the taxpayer’s spouse, or an eligible dependent) who are enrolled in eligible educational institutions. The credit may be up to $2,000 for undergraduate, graduate and continuing education coursework taken to acquire or improve job skills.