Tax Relief Act of 1997
The following is provided for informational purposes only and was prepared to inform students about the benefits and requirements contained in the Tax Relief Act of 1997. Liberty University cannot provide tax advice. We ask that students and parents consult a tax advisor for additional information on eligibility or instructions on filing for these tax credits.
Select from the following for information pertaining to the Tax Relief Act of 1997:
- Tax Relief Act of 1997
- Starting in 2003 - Reporting of Financial Information
- Hope Scholarship Tax Credit
- Lifetime Learning Tax Credit
- Explanation of Qualifying Expenses for Education Tax Credits
IRS Publications and Forms
Tax Release Act of 1997
The Tax Relief Act of 1997, which effective with the 1998 tax year, established a Hope Tax Credit and a Lifetime Learning Tax Credit for eligible persons who are paying higher education costs for themselves or members of their families. These benefits are in the form of nonrefundable tax credits and are computed by totaling amounts paid for qualified tuition and enrollment related expenses reduced by grants, scholarships and other tax-free educational assistance. In addition, the Tax Relief Act also created the Student Interest Deduction, which allows a taxpayer to deduct the amount of interest they have paid toward loans that have been acquired to pay for various educational expenses.
Starting in 2003 -- Reporting of Financial Information Required
Tax year 2003 was the first year in which educational institutions were required to report financial information to the Internal Revenue Service (IRS) and to the student via the IRS form 1098T.
Final regulations developed by the IRS for the Tax Relief Act of 1997 allowed educational institutions to choose whether the financial information reported for tax credits is based upon “payments received” or “amounts billed.” Liberty University will report amounts billed for qualified tuition and related expenses during the calendar year on all 1098T statements. Your qualified tuition and related expenses translates to tuition, the technology fee, activity fee, seminary activity fee, and course fees (as applicable). Liberty University is also required to report the total amount of scholarships and grants received during the year. This information is provided to assist in determining the amount of eligibility for the tax credits.
Hope Scholarship Credit
- Available ONLY for the first two years of postsecondary education
- Available ONLY for 2 years per eligible student
- Student must be pursuing a degree
- Student must be enrolled at least half time for at least one academic period beginning during the year
- Maximum credit up to $1,500 credit per eligible student (100% of the first $1,000 paid in qualified expenses and 50% of the next $1,000)
- Credit phases out at modified adjusted gross income levels up to $51,000 for single filers; $102,000 married filing jointly
- Liberty University mailed the IRS Form 1098T the last week of January.
- Available for all years of postsecondary education
- Available for an unlimited number of years
- Student not required to be pursuing a degree
- Available for enrollment in one or more courses
- Maximum credit up to $2,000 credit per return (20% of first $10,000 paid for qualified expenses)
- Credit phases out at modified adjusted gross income levels up to $51,000 for single filers; $102,000 married filing jointly
- Liberty University mailed the IRS Form 1098T the last week of January.
Explanation of Qualifying Expenses for Education Tax Credits
Internal Revenue Service Publication 970 and IRS Form 8863 explain which tuition and fee expenses qualify for education tax credits. At Liberty University, the following expenses are considered qualified expenses, are required for enrollment and meet the criteria specified by IRS:
- Tuition
- Technology Fee
- Activity Fee
- Seminary Activity Fee
- Course Fees
Please note: the fees listed above may be contingent upon registration in a particular course.
IRS specifies that in order for qualifying expenses to be used for tax credits, they must be paid during the tax year (normally January 1 - December 31) by the taxpayer taking the deduction. The following payment types would meet the criteria specified by IRS:
- Cash
- Check
- Credit Card
- Student Loans
- Parent Loans
