This news release describes past events and should be used for historical purposes only. Please note date of release.
UW-Eau Claire News Bureau
Schofield Hall 218
Eau Claire, WI 54702-4004
1998 Tax Credits for Education To
Benefit College Students, Families
phone (715) 836-4741
fax (715) 836-2900
web http://www.uwec.edu
e-mail newsbur@uwec.edu

MAILED: Dec. 9, 1997

EAU CLAIRE -- The new year may bring new tax benefits for parents who are sending or planning to send their children to college and for adults who want to return to school. Officials at the University of Wisconsin-Eau Claire say the HOPE Scholarship tax credit and the Lifetime Learning tax credit are important new tax incentives and urge students and their families to become familiar with them.
"As 1998 approaches, we're starting to get calls about the implications of these changes in the tax law," said Terry Sullivan, director of Business Services at the UW-Eau Claire. "The university cannot provide tax advice, but we're telling students and parents to consult their personal tax adviser or the IRS if they have questions or specific concerns."
In general the HOPE Scholarship tax credit helps make the first two years of college or vocational school universally available. Students will receive a 100 percent tax credit for the first $1,000 of tuition and required fees and a 50 percent tax credit on the second $1,000. This credit is available for qualified tuition and related fees less grants, scholarships and other tax-free educational assistance such as veterans' benefits. It is available for payments made after Dec. 31, 1997, for academic terms that begin after that date.
The term "qualified tuition and related expenses" means the tuition and fees an individual is required to pay in order to be enrolled at or attend an eligible institution. Amounts paid for any course or other education involving sports, games or hobbies are not eligible for the credit, unless the course or other education is part of the student's degree program. Charges and fees associated with room, board, student activities, athletics, insurance, books, equipment, transportation, and similar personal, living or family expenses are not qualified tuition or related expenses.
Because second semester tuition payments made before Jan. 1, 1998, aren't eligible as tax credits, Sullivan said UW-Eau Claire students studying abroad next semester who already paid their tuition may request a refund and repay their tuition after Jan. 1 if they believe their tax liability will be affected.
However, refunds for the $100 tuition prepayment required of students when they register for spring semester won't be necessary, Sullivan said. "We don't believe it's necessary to refund the prepayment because expenses such as the segregated fee, which does not qualify for the tax credit, already exceed the $100," he said. "In future years early payments won't be a problem because the law allows for payments to be made as much as three months prior to the beginning of the calendar year for academic terms that begin after Jan. 1. This year is different because the law doesn't take effect until 1998."
The HOPE credit is phased out for joint filers who have between $80,000 and $100,000 of adjusted gross income, and for single filers who have between $40,000 and $50,000 of adjusted gross income.
The Lifetime Learning tax credit is targeted to adults who want to go back to school, change careers or take a course or two to upgrade their skills and to college juniors, seniors, graduate and professional degree students. A family will receive a 20 percent tax credit for the first $5,000 of tuition and required fees paid each year through 2002, and for the first $10,000 thereafter.
Just like the HOPE Scholarship tax credit, the Lifetime Learning tax credit is available for tuition and required fees less grants, scholarships and other tax-free educational assistance such as veterans' benefits. Families may claim the credit for amounts paid on or after July 1, 1998, for college or vocational school enrollment beginning on or after that same date. The maximum credit is determined on a per-taxpayer (family) basis, regardless of the number of post-secondary students in the family, and is phased out at the same income levels as the HOPE Scholarship tax credit. Families will be able to claim the Lifetime Learning tax credit for some members of their family and the HOPE Scholarship tax credit for others who qualify in the same year.
Detailed information about the new education tax incentives can be found on the UW-Eau Claire Financial Aid web site or visit the IRS web site at www.irs.ustreas.gov. Questions may be directed to the IRS Office of Public Liaison, (202) 622-2970, or to a personal tax adviser.

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JW


UWEC [Administrative Offices] [News Bureau]

Janice B. Wisner
UW-Eau Claire News Bureau
Schofield 218
(715) 836-4741
newsbur@uwec.edu

Updated: Dec. 9, 1997