Hope Scholarship Information

IMPORTANT TAX INFORMATION FOR STUDENTS AND PARENTS

The Taxpayer Relief Act of 1997 (TRA) created two Federal income tax credits for eligible taxpayers paying qualified tuition and related expenses. Under the provisions of the TRA, the College is required to report to you (the student) and the Internal Revenue Service, certain information concerning your status as a student on a new tax statement referred to as Form 1098-T Tuition Payments Statement. A copy of this tax statement will be mailed under separate cover by the required IRS mailing deadline of January 31, 2002. Reporting requirements for tax year 2001 instruct the College to provide Form 1098-T to both the IRS and the student. For 2001, the statement is not required to show an amount. The only required information on the Form 1098-T for tax year 2001 is demographic information including the student's name, address, social security number and the yes/no indicator box for half-time enrollment for students enrolled in credit based courses.

Although the tax credits will benefit many taxpayers, the laws and regulations governing the credits are complex. Accordingly, you may wish to consult with a professional tax advisor in order to determine your eligibility and maximize your tax benefit. For your information, the tax credits are described briefly below.

Hope Scholarship Tax Credit
The Hope tax credit enables a taxpayer to claim a tax credit of up to $1,500 per student for the cost of qualified tuition and related expenses pertaining to the first two years of post-secondary education at an eligible educational institution. To be eligible, the student must be enrolled at least half-time in a degree or certificate-granting program, for at least one academic period during the tax year. The Hope tax credit is available for 100 percent of the first $1,000 of qualified tuition and fees paid and 50 percent of the next $1,000 paid per tax year per student.

Lifetime Learning Tax Credit
The Lifetime Learning tax credit is applicable to any level of post-secondary education and it enables a taxpayer to claim a tax credit of up to $1,000 per family for the cost of qualified tuition and related expenses. The Lifetime Learning tax credit is available for 20 percent of the first $5,000 of qualified tuition and fees paid per year per family.
The Hope and Lifetime Learning tax credits cannot be claimed for the same student in the same tax year. The taxpayer may claim both tax credits on one tax return (for different students) but must choose which credit to claim for each student. Taxpayers will need to file IRS Form 8863 Education Credits with their tax returns to claim the tax credits.

Income Limitations
The education tax credits are available to single taxpayers with modified adjusted gross income of $40,000 or less, and married taxpayers filing joint returns of $80,000 or less. A proportional phaseout takes place for those with incomes between $40,000 to $50,000 for single taxpayers, and between $80,000 and $100,000 for married taxpayers. Married taxpayers must file a joint return in order to claim either credit.

Qualified Tuition and Related Expenses
Qualified tuition and related expenses for both tax credits are defined in the TRA, as tuition and fees required for the enrollment or attendance of the taxpayer, the taxpayer's spouse, or the taxpayer's dependents at an eligible education institution for courses of instruction. Camden County College is considered an eligible education institution under the Act. Qualified tuition and fees do not include: (1) expenses for courses relating to sports, games or hobbies, unless the course is part of the student's degree program; and (2) charges and fees associated with room, board, student activities, athletics, insurance, books, equipment, transportation, and similar personal, living or family expenses.

Based on the tax law as enacted and temporary guidance issued by the IRS, it appears that the following Camden County College tuition and fees College qualify for the tax credits: Tuition and Lab Fees. Based on the College's understanding of the tax law, the following College fees do not appear to qualify for the tax credits: General Service Fee, Student Activity Fee, Insurance Fee, Application Fee, Deferred Payment Fee, Late Registration Fee, Late Payment Fee, Returned Check Fee, and Books.

The education tax credits are based on the amount of qualified tuition and fees actually paid by the taxpayer or the student in calendar year 2001, who is claimed as a dependent on the taxpayer's tax return. For this purpose, payments do not include scholarships, financial aid grants (e.g., Federal Pell grants, Tuition Aid grants) or employer provided educational assistance. However, payments do include amounts borrowed by the student (e.g. Federal Direct student loans) to pay for qualified tuition and fees.

Prepaid Expenses
If you paid qualified expenses in 2001 for an academic period that begins in the first 3 months of 2002, you can use the prepaid amount in figuring your 2001 credit. For example, if you paid $1,000 in December 2001 for qualified tuition and related expenses for the 2002 Spring semester that begins in January 2002, you can use that $1,000 in figuring your 2001 credit.

Additional Sources of Information
In an effort to assist taxpayers in determining their eligibility for the new tax credits, the IRS has issued Publication 970, Tax Benefits for Higher Education. You may obtain this Publication at any IRS office or download it from the Internet at www.irs.ustreas.gov/prod/forms_pubs/pubs.html . IRS has also issued Notice 97-60, Education Tax Incentives, which addresses specific questions that taxpayers may have concerning their eligibility for the tax credits. The Notice is available on the Internet at www.irs.ustreas.gov/prod/hot/not97-60.html . Finally, the U.S. Department of Education has created a comprehensive Web site covering the tax credits at www.ed.gov/inits/hope/