TAX CREDITS

The Taxpayer Relief Act of 1997 and the Balanced Budget Act of 1997 which contain the Hope Scholarship Credit and the Lifetime Learning Credit provide tax credits for qualified tuition and related expenses (tuition and fees) for post-secondary education.

The Hope Scholarship is available to all undergraduate students in their first and second years of college. This tax credit could be worth $1,500 per year for expenses paid on behalf of the post-secondary education. It is worth 100 percent on the first $1,000 spent on qualified academic fees and 50 percent on the next $1,000 spent on qualified educational expenses. The student must be enrolled on at least a half-time basis for at least one academic period during the year for the expenses to qualify.

Post-secondary and lifetime learning tax credits are available for undergraduates in their third and fourth years, graduate level, and all part-time students. The law allows a lifetime learning credit equal to 20 percent of the first $5,000 spent on qualified tuition and related expenses each year through 2002, and 20 percent of the first $10,000 thereafter. The student must be enrolled in the University in undergraduate or graduate-level class for the purpose of acquiring or improving job skills.

Both credits limit qualified expenses to the expenses of the taxpayer, the taxpayer's spouse, or the dependent of the taxpayer. Additionally, both credits are phased out for taxpayers with modified adjusted gross incomes (AGI) between $40,000 and $50,000 (between $80,000 and $100,000 for joint filers).

For further information, contact the IRS website at: www.irs.ustreas.gov/prod/hot/not97-601.html

The South Carolina revenue code also has an income tax credit that is available to qualifying students. This credit can be worth up to $850 per year for expenses paid on behalf of the post post-secondary education. It is worth 25 percent on the first $3,454 spend on qualified academic fees. See South Carolina form I-319.

For further information, contact the SC Department of Revenue website at: www.dor.state.sc.us/forms.html

To claim these tax credits, taxpayers are required to provide the name and taxpayer identification number of the student on the taxpayer's return. The University is required to report information to the IRS related to higher education tuition and expenses, including refunds of expenses, paid during the tax year. A copy of this information will be sent to students by approximately February 1 of each year.

The University of South Carolina Columbia campus will forward to all fee paying students a 1098-T in January of each year. If you do not receive this form by February 15, you may contact the Business Office at 938-3765 for a reprinted form. The information for the form is not available to USC Sumter until after the Columbia campus prints the form.

It is recommended that all taxpayers consult with their tax advisor, as each individual's tax situation is different. The University of South Carolina Sumter does not provide individual tax advice.

Suggestions and comments to Bruce Blumberg.