Northern Arizona University

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HOPE SCHOLARSHIP TAX CREDIT

• Non-refundable tax credit
• Beginning January 1, 1998
• Program leading to a degree
• At least 1/2 time student at least one semester
• First 2 years postsecondary education
• Student must be free oa any Federal/State felony convictions for possession/distribution of a controlled substance.
• Claim no more than 2 years per student
• Does NOT include graduate level studies
• 100% of first $1,000 out-of-pocket expense, 50% of next $1,000 out-of-pocket expense
• Maximum $1,500 per student
• Claim either Hope Scholarship or Lifetime Learning but not both for each student each year
• Either student OR taxpayer claiming student as dependent may claim that student's tax credit, but not both in the same year.
• Adjusted Gross Income:  Under $42,000 ($85,000 married filing jointly) may claim up to maximum credit.  $42,000 to $52,000 ($85,000 to $105,000 married filing jointly) the credit gradually reduces on a sliding scale.  Over $52,000 ($105,000 married filing jointly) cannot claim Hope or Lifetime Learning Credit.
• Approved Out-of-Pocket Funds: Earnings, loans, gifts, inheritance and personal savings.
• Qualified Tuition & Fees:  Tuition & Fees required for student to be enrolled or to attend school.  Not eligible:  Payments for sports, games, or hobbies unless part of the degree program.  (Books/equipment are ONLY eligible if required to purchase through NAU ONLY)
• Qualified Tuition & Fees (or Qualified Expenses for Interest Deduction) are reduced by any refunds as well as the following:  Any tax-free educational assistance you received; qualified scholarships excludable from income; Veteran's or Armed Forces educational assistance (Chapter 30, 31, 32, 34, or 35 of title 38, US Code or under chapter 1606 or title 10); employer-provided educational assistance excludable from income, any other nontaxable payments (other than gift, bequest, devise or inheritance) received for education expense.
• Married students (or married taxpayers claiming students as dependents) must file a joint return with spouse to claim tax credit or interest deduction on federal income tax return.
• Tax benefits may include:  taxpayer, taxpayer's spouse, and eligible dependents - (eligible dependent: unmarried child, child under 19 years old or full-time student under 24 taxpayer supplies more than 1/2 support for year)
• Qualified Institution:  generally all accredited public, nonprofit, and proprietary postsecondary institutions.  Described in Higher Education Act of 1965 (20 U.S.C. 1088) and participates in federal student financial aid program under title IV of HEA (20 U.S.C. 1070 et seq.) or certified but not participating.

LIFETIME LEARNING TAX CREDIT

• Non-refundable tax credit
• Beginning July 1, 1998
• Either Degree Program OR Job-related Skills
• No requirements - no minimum number of hours
• No limit on level of postsecondary studies
• No limit on number of years claimed per student
• Includes graduate level studies
• 20% of first $10,000 out-of-pocket expense
• Maximum $2,000 per taxpayer for any number of students
• Claim either Hope Scholarship or Lifetime Learning but not both for each student each year
• Either student OR taxpayer claiming student as dependent may claim that student's tax credit, but not both in the same year.
• Adjusted Gross Income:  Under $42,000 ($85,000 married filing jointly) may claim up to maximum credit.  $42,000 to $52,000 ($85,000 to $105,000 married filing jointly) the credit gradually reduces on a sliding scale.  Over $52,000 ($105,000 married filing jointly) cannot claim Hope or Lifetime Learning Credit.
• Approved Out-of-Pocket Funds: Earnings, loans, gifts, inheritance and personal savings.
• Qualified Tuition & Fees:  Tuition & Fees required for student to be enrolled or to attend school.  Not eligible:  Payments for sports, games, or hobbies unless part of the degree program.  (Books/equipment are ONLY eligible if required to purchase through NAU ONLY)
• Qualified Tuition & Fees (or Qualified Expenses for Interest Deduction) are reduced by any refunds as well as the following:  Any tax-free educational assistance you received; qualified scholarships excludable from income; Veteran's or Armed Forces educational assistance (Chapter 30, 31, 32, 34, or 35 of title 38, US Code or under chapter 1606 or title 10); employer-provided educational assistance excludable from income, any other nontaxable payments (other than gift, bequest, devise or inheritance) received for education expense.
• Married students (or married taxpayers claiming students as dependents) must file a joint return with spouse to claim tax credit or interest deduction on federal income tax return.
• Tax benefits may include:  taxpayer, taxpayer's spouse, and eligible dependents - (eligible dependent: unmarried child, child under 19 years old or full-time student under 24 taxpayer supplies more than 1/2 support for year)
• Qualified Institution:  generally all accredited public, nonprofit, and proprietary postsecondary institutions.  Described in Higher Education Act of 1965 (20 U.S.C. 1088) and participates in federal student financial aid program under title IV of HEA (20 U.S.C. 1070 et seq.) or certified but not participating.

STUDENT LOAN INTEREST DEDUCTION

• (Deducted from Adj. Gross Income)
• Beginning January 1, 1998
• Program leading to a degree
• Must have been at least 1/2 time student
• No limit on level of postsecondary studies
• No longer limited to first 60 months
• Includes graduate level studies
• Maximum $2,500 per taxpayer from 2003 on
• May be claimed in addition to other credits
• Student may NOT claim tax credit if claimed as a dependent by another taxpayer
• Adjusted Gross Income:  $50,000 or less ($100,000 married filing jointly) may claim up to maximum credit.  $50,000 to $65,000 ($100,000 to $130,000 married filing jointly) the credit gradually reduces.  Above $65,000 (130,000 married filing jointly) not eligible for interest deduction.
• Deduction does not depend on whether loan is federally guaranteed or subsidized, as long as other eligibility requirements are met.
• Qualified Expenses:  Tuition & Fees, Room, Board, Books, Equipment, Transportation, and other necessary educational expenses.
• Qualified Tuition & Fees (or Qualified Expenses for Interest Deduction) are reduced by any refunds as well as the following:  Any tax-free educational assistance you received; qualified scholarships excludable from income; Veteran's or Armed Forces educational assistance (Chapter 30, 31, 32, 34, or 35 of title 38, US Code or under chapter 1606 or title 10); employer-provided educational assistance excludable from income, any other nontaxable payments (other than gift, bequest, devise or inheritance) received for education expense.
• Married students (or married taxpayers claiming students as dependents) must file a joint return with spouse to claim tax credit or interest deduction on federal income tax return.
• Tax benefits may include:  taxpayer, taxpayer's spouse, and eligible dependents - (eligible dependent: unmarried child, child under 19 years old or full-time student under 24 taxpayer supplies more than 1/2 support for year)
• Qualified Institution:  generally all accredited public, nonprofit, and proprietary postsecondary institutions.  Described in Higher Education Act of 1965 (20 U.S.C. 1088) and participates in federal student financial aid program under title IV of HEA (20 U.S.C. 1070 et seq.) or certified but not participating.