HOPE SCHOLARSHIP TAX CREDIT

HOPE SCHOLARSHIP CREDIT

General Information

This special bulletin is drafted to inform you of the higher education tax incentive recently enacted by the Taxpayer Relief Act of 1997, which provides tax credits for qualified educational expenses. We encourage you to seek professional advice with a tax accountant regarding your particular situation. Questions concerning these tax credits may be directed to the IRS Office of Public Liaison at your local area. More indepth information are available at the following websites:

http://www.irs.ustreas.gov/hot/tax-law.html

http://www.nacubo.org/website/members/issues/bulletins/irs9760notice.html

Beginning January 1, 1998, taxpayers may be eligible to claim a non-refundable Hope Scholarship Credit against their federal income taxes. The Hope Scholarship may be claimed only for qualified tuition and expenses that a student is "required to pay" to attend an eligible institution and must be directly related to a course of study. Therefore, expenses associated with student activities, insurance, athletics (unless it is part of the degree program), room and board, etc., are not allowed.

At this point, the following eligibility requirements and information as we understand it:

Applies to each student in a tax payer's family (i.e. the taxpayer, the taxpayer's spouse, or an eligible dependent) enrolled at least half-time in one of the first two years of postsecondary education or in a program leading to a degree, certificate, or other recognized educational credential.
The student is free of any felony drug offense.
The credit amount allowed is 100% of the first $1,000 of the taxpayer's outofpocket expenses for qualified tuition and related expenses, plus 50% of the next $1,000 of the taxpayers outofpocket expenses for qualified tuition and related expenses. Therefore, the maximum credit for the expenses of an eligible student is $1,500.
Qualified tuition and related expenses will be reduced by certain financial aid awards including PELL, SEOG, and institutional waivers and scholarships.
Is gradually reduced for taxpayers with modified adjusted gross income between $40,000 and $50,000 (between $80,000 and $100,000 for married taxpayers filing jointly).
Can be claimed when taxpayers file their 1998 tax returns in 1999 for payments of qualified fees and related expenses made on or after January 1, 1998 (for academic periods beginning on or after January 1, 1998).

The first time taxpayers will be able to claim the credit is in 1999 when they file their 1998 tax returns, since the Hope Scholarship Tax Credit is applicable for fees or tuition paid beginning January 1, 1998.

Students whose fee payment priority due date is in the month of December 1997 may opt to apply for an installment payment plan. For further information or to arrange a special installment payment, please contact the Bursar's Office at (415) 338-1281.