Help from Tax Breaks-(1098-T)

Federal tax laws may offer special benefits to help eligible students and families pay for higher education.  Two programs specifically use the 1098-T tax form issues by USF to determine eligibility for those credits:  The Hope Scholarship Tax Credit and the Lifetime Learning Tax Credit.  Information for these two credits can be found here: USF Tax information

For information about your 1098-T, please contact Wayne Browning at (813) 974-6049 or by email at wbrownin@admin.usf.edu.

Your 1098-T can be found on OASIS under Tuition and Fees - Tax Notification

In addition to the Hope Scholarship Tax Credit and the Lifetime Learning Tax Credit, you may be eligible to claim additional tax benefits as well.

Note:  Some of these tax benefits phase out when a student’s or family’s income reaches various levels. Numerous other restrictions also apply.  In addition, some of the credits or deductions will change from year to year.  Be sure to check with your tax advisor and your school’s financial aid office for specific details.

Student Loan Interest Deduction
All interest up to $2,500 per year on eligible loans is deductible.  The loans must have been used to pay qualified costs of attendance, including room and board.

Coverdell Education Savings Accounts (Formerly known as Education IRAs)
Money in these accounts may increase tax-free.  Withdrawals may also be tax-free if the student’s higher education expenses for a year equal or exceed the withdrawal.  Eligible expenses include tuition and fees, books and materials, and room and board for students enrolled at least half-time.  Total contributions per tax year may be up to $2,000.

IRA Withdrawals for Education Expenses
Federal income tax is owed on withdrawals from IRAs, including a Roth IRA.  But there may be no early withdrawal penalty when the money is equal to or less than a student’s qualified education expenses for a year (including room and board for students enrolled at least half-time).

Qualified Prepaid Tuition Programs (QTPs) – Also called 529 Plans
Qualified Prepaid Tuition Programs provide families a better, more tax-advantaged way to save for college.  A distribution for a QTP established and maintained by an eligible educational institution can be excluded from income if the amount distributed is used to pay qualified education expenses.

Qualified Prepaid Tuition Programs may include those established by educational institutions such as colleges, as well as state programs.

The student or parent may also claim a Hope Scholarship Tax Credit or Lifetime Learning Tax Credit as long as the QTP distributions are not used for the same expenses for which the credit is claimed.

Florida 529 Plans

Note:  These plans often are administered by financial services companies.  Details of the particular plans may differ, sometimes significantly.

Education Savings Bonds
A savings bond qualifies if:

• It is a Series EE U.S. Savings Bond issued after 1989 or a Series I Bond.
• It is issues either in the taxpayer’s name (as sole owner) or also in the spouse’s name (as co-owners).
• The owner is at least 24 years old before the bond’s issue date.

The interest on these bonds may be excluded from gross income if the taxpayer has qualified higher education expenses during the redemption year.  Qualified education expenses are tuition and fees – not room and board and other expenses.

Parent and Student Guide to Federal Tax Benefits for Tuition and Fees (for Tax Year 2007)

http://www.nasfaa.org/AnnualPubs/TaxBenefitsGuide.html