TAXES & EDUCATIONAL
CREDITS
FOR STUDENTS &
PARENTS
Presented By
Joseph R. Maggitti Sr., MBA
James Hudson, CPA, MBA
Harold Singletary
1098T FORM
FILER’S name, street address, city, state, ZIP code, and telephone
number
1 Payments received for
qualified tuition and related
expenses
OMB No. 1545-1574
$
2011
2 Amounts billed for qualified
tuition and related expenses
$
FILER’S federal identification no.
STUDENT'S social security
number
Form 1098-T
3 If this box is checked, your educational institution has
changed its reporting method for 2011
4 Adjustments made for a prior 5 Scholarships or
year
grants
STUDENT'S name
$
6 Adjustments to scholarships
or grants for a prior year
Street address (including apt. no.)
City, state, and ZIP code
Service Provider/Acct. No. (see instr.)
$
8 Check if at least half-time
student
9 Check if a graduate student
.
.
.
.
Copy B
For Student
This is important tax
information and is
being furnished to the
$
Internal Revenue
7 Check if the amount
Service.
in box 1 or 2
includes amounts for
an academic period
beginning January March 2012 ▶
10 Ins. contract
reimb./refund
$
1098T FORM
• Block 2 - Amount billed for qualified tuition and related
expenses for calendar year 2011
• IRS allows deduction for amount paid for tuition and
related expenses for calendar year 2011
• Student loans are the same as you paying the tuition and
related expenses the day that the loans are posted to
your account
1099T Form
• For expenses to be deductible block 8 must be checked
• If block 9 is checked you may not be eligible for The
American Opportunity Educational Credit since this can
only be used for the first four years of post secondary
education
• You may still be able to take the Lifetime Education Credit
1099T Form
• Box 5 contains any scholarships, stipends and grants that
you may have received
• Box 7 is checked if box 2 included the tuition for the
following spring semester
• EG If you spring 2012 tuition bill was billed to you in
December 2011 it would be included in Box 2
Scholarships and Fellowships
• A scholarship is generally an amount paid for the benefit
of a student at an educational institution to aid in the
pursuit of studies. The student may be either an
undergraduate or a graduate. A fellowship is generally an
amount paid for the benefit of an individual to aid in the
pursuit of study or research. Generally, whether the
amount is tax free or taxable depends on the expense
paid with the amount and whether you are a degree
candidate.
Scholarships and Fellowships
• A scholarship generally is an amount paid for the benefit
of a student at an educational institution to aid in the
pursuit of studies. The student may be in either a
graduate or an undergraduate program.
• A fellowship grant generally is an amount paid for the
benefit of an individual to aid in the pursuit of study or
research.
Scholarships and Fellowships
A scholarship or fellowship is tax free only if you meet the
following conditions:
• You are a candidate for a degree at an eligible
educational institution.
• You use the scholarship or fellowship to pay qualified
education expenses.
Qualified Education Expenses
• For purposes of tax-free scholarships and fellowships,
these are expenses for Tuition and fees required to enroll
at or attend an eligible educational institution and courserelated expenses, such as fees, books, supplies, and
equipment that are required for the courses at the eligible
educational institution. These items must be required of all
students in your course of instruction.
Expenses that Don’t Qualify
Qualified education expenses do not include the cost of:
• Room and board.
• Travel.
• Research.
• Clerical help.
• Equipment and other expenses that are not required for
enrollment in or attendance at an eligible educational
institution.
This is true even if the fee must be paid to the institution as
a condition of enrollment or attendance. Scholarship or
fellowship amounts used to pay these costs are taxable.
Student Exception to FICA Tax
• FICA (Social Security and Medicare) taxes do not apply to
service performed by students employed by a school,
college, or university where the student is pursuing a
course of study. Whether the organization is a school,
college, or university depends on the organization’s
primary function. In addition, whether employees are
students for this purpose requires examining the
individual’s employment relationship with the employer to
determine if employment or education is predominant in
the relationship.
Who Can You as a Dependent
Exemption
• If you are under 24 years old, attended school for at least
five months of the year, you are not married and you did
not contribute over half your support your parents can
claim you as a dependent exemption
Who Can Claim a Dependent’s Expenses
• If there are qualified education expenses for your
dependent during a tax year, either you or your
dependent, but not both of you, can claim an American
opportunity credit for your dependent’s expenses for that
year.
Who Can Claim the Credit
You can claim the American opportunity credit if all three of
the following requirements are met.
• You pay qualified education expenses of higher
education.
• You pay the education expenses for an eligible student
• The eligible student is either yourself, your spouse, or a
dependent for whom you claim an exemption
Note. Qualified education expenses paid by a dependent
for whom you claim an exemption, or by a third party are
considered paid by you.
American Opportunity Tax Credit
• This credit can help parents and students pay part of the
cost of the first four years of college. The American
Recovery and Reinvestment Act modifies the existing
Hope Credit for tax years 2009 and 2010, making it
available to a broader range of taxpayers. Eligible
taxpayers may qualify for the maximum annual credit of
$2,500 per student. Generally, 40 percent of the credit is
refundable, which means that you may be able to receive
up to $1,000, even if you owe no taxes
. The Lifetime Learning Credit
• This credit can help pay for undergraduate, graduate and
professional degree courses – including courses to
improve job skills – regardless of the number of years in
the program. Eligible taxpayers may qualify for up to
$2,000 per tax return.
Education Credit Notice
• To qualify for an education credit, you must pay post-
secondary tuition and certain related expenses for
yourself, your spouse or your dependent. The credit may
be claimed by the parent or the student, but not by both.
Students who are claimed as a dependent cannot claim
the credit.
The End
• Any Questions
• Web Page: www.hudsoncpallc.com
• Email: joesenior@hotmail.com
• Office Phone: 843-654-5025
• Cell Phone: 843-708-9110
• Address: 885 Island Park Drive Suite A
• Dabiels Island SC 29492