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Tax Information
Taxable Portion of Grants and Scholarships
Students need to be aware that IRS Publication 520 states that scholarships and grants that exceed the cost of tuition, fees, and required books are considered to be taxable income to the student. It is the student's responsibility to maintain records in order to determine potential tax liability.
The Office of Financial Aid cannot offer specific tax information and strongly encourages students to consult a tax advisor or the Internal Revenue Service (IRS) for details, or visit the IRS web site at http://www.irs.gov/.
Taxable Federal Work-Study Earnings
Earnings under the federal work-study program are earned income and subject to federal, state, and local tax withholding unless a student claims exemption on the form W-4. Students employed under the federal work-study program will receive a W-2 form at the end of January, which documents all earnings at the University. It is the student's responsibility to report those earnings on their income tax returns.
It is the student's responsibility to report all taxable earnings on the FAFSA. Students should also include their taxable earnings from the Federal Work-Study program as an exclusion on Worksheet C of the FAFSA.
Hope & Lifetime Learning Tax Credits
Two tax credits, the Hope Scholarship Credit and the Lifetime Learning Credit took effect in 1998. These are designed to help taxpayers reduce the cost of tuition and fees paid for higher education.
The Hope Scholarship Credit provides a credit of up to $1500 for a student who is enrolled as a degree- seeking student on at least a half time basis in one of the first two years of post-secondary education.
The Lifetime Learning Credit provides a credit of up to $2000 per year for all other students, including graduate students and continuing education students. IRS Publication970 (Tax Benefits for Education) and IRS Form 8863 (Education Credits) are available from the IRS at 1-800 tax form (1-800-829-3676), or can be downloaded from the IRS web site at http://www.irs.ustreas.gov/pub/irs-pdf/p970.pdf.
Who qualifies for these credits?
If you file a federal income tax return and claim yourself as an exemption and your income is below the cutoff, you may qualify. If your parents (or guardian) claim you on their tax return, they may qualify. Taxpayers earning more than $51,000 of modified adjusted gross income and married taxpayers filing jointly with more than $103,000 of modified adjusted gross income are not eligible. Florida Gulf Coast University cannot determine if you are eligible. You should consult a tax advisor or obtain IRS Publication 970 and Form 8863 to review the eligibility criteria.
Tuition and Fees Deductions
A tuition and fee deduction has been available to some students (or parents who claim the student as an exemption) during 2002 through 2005 when the student has not qualified for the Hope or Lifetime Learning Tax credits. The maximum deduction is $3,000 in 2003. No tuition and fee deduction is allowed for individuals with modified adjusted gross income of $65,000 for single tax filers, and $130,000 for married tax filers as of 2003. Visit www.irs.gov and see publication 970 for additional information.
What if Financial Aid paid some of my tuition?
Tuition and fees covered by grants, scholarships or waivers do not count when claiming tax credits or deductions. Only those expenses paid by student loans or your own resources (or your parent's own resources) may be included. Box number 1 on Form 1098-T contains the amount of qualified tuition and fees you paid or billed during a given Tax year.
Student Loan Interest Deductions
There is a deduction allowed for interest paid on student loans under certain circumstances. The loan must have been used for qualified educational expenses during periods of enrollment of at least half time. The maximum deduction as of 2003 is 2,500. No interest deduction is allowed for individuals with modified adjusted gross income of $65,000 for single tax filers and $130,000 for married tax filers as of 2003. Visit www.irs.gov and see publication 970 for additional info.
Where can I get more information?
You can call the IRS at 1-800-TAX-FORM and request Publication 970 and Form 8863. You may also wish to consult a tax advisor. For more information about the Hope Scholarship Tax Credit and the Lifetime Learning Tax Credit, visit the websites below:
