Carroll Community College

Information about the "Form 1098-T"

This year Carroll Community College is reporting numbers on its tax form using registration information, and not cash payments for tax year 2007. The changes were provided by our software vendor and meet the current IRS reporting requirements.

The following questions and answers guide you through the basics of the 1098-T tax form and offer explanations about the boxes on the form.

What is a 1098-T form?

The Tax Form 1098-T is a document to inform the taxpayer as to whether or not he or she is eligible for the Hope Scholarship Tax Credit  in tax year 2007. The Hope Scholarship tax credit provides a maximum tax credit of $1,650 for tax year 2007 based on the taxpayers modified adjusted gross income (MAGI). The amount of the tax credit is gradually reduced if your MAGI are between $47,000 to $57,000 for single taxpayers and $94,000 to $114,000 for taxpayers married filing joint.

Who is eligible to take the tax credit?

The student, if not considered a dependent for income tax purposes, is eligible to claim the credit. If the student had tuitions and fees paid by the parents, then the parents can claim the credit providing income for the year is within IRS guidelines. If the student or the parents are filing married separate, then the Hope Scholarship and the Lifetime Learning Credit cannot be taken. However, you can use the tuition and fee deduction. (See below other recommendations for a more detailed explanation.)

What are the boxes on the form telling me?

• Box number “one” is not being used this year for reporting purposes.

• Box number "two" represents total amount billed for tuition and qualified fees during calendar year 2007.  If the student received a waiver during the year, then the amount of the waiver would reduce the amount in box "two".
  
• Box number "four" nets adjustments to the student's account.  If a number is posted to box "four," then this amount should be subtracted from the amount in box "two."  Items included in box "four" would be prior year tuition and fee adjustments during the calendar year.  An example of this would be if the student registered for a class in November 2006 for the spring 2007 semester.  The amount would show as an adjustment on the 1098-T because the registration took place in calendar 2006.  Remember to subtract box 4 from box 2.
  
• Box number "five" reflects financial aid and scholarships made to the student during the tax year.  If the students aid exceeds tuition and fees, then the tax credit may not be taken.  Remember to subtract box 5 from box 2 .
  
• Box number "six" shows adjustments for scholarships and/or grants for a semester held in the prior tax year.  Remember to subtract box 6 from box 2.
  
• Box number "seven" will be marked with a "Y" if the student made a registration in tax year 2007 but the class is scheduled for calendar 2008.  The registration is reflected in box "two."
  
• Box number "eight" tells the recipient whether or not they qualify for the Hope Scholarship according to the law.  The law states that a student must be enrolled at least half time (minimum - six credit hours in one semester) in a degree or certificate program.  If the student qualifies, then the box will be marked with an "X".
  
  Example:  Jane Doe took six credit hours during the year at Carroll Community College.  If she took a three credit course in the spring and a three credit course in the fall, she would not qualify because under the law because she would not be considered a half-time student in any one semester.  If Jane took six credits in the spring semester, she would qualify for the Hope Scholarship credit because under the law she would be considered a half-time student.

What form or forms do I fill out?

To apply for the Hope Scholarship, one should refer to IRS Tax Form 8863 and Publication 970 when filling out your forms.  If you're experiencing difficulty filling out the form, you should consult a tax advisor.

If  I don't qualify for the Hope Scholarship, can I apply for a credit using the Lifetime Learning Credit?

Yes, you can.  The law states that you can claim a credit of twenty percent of total tuition and related fees to a maximum of $2,000 ($10,000*20%). 
The tax form to be used for Lifetime Learning Credit is the same as the Hope Scholarship.  Refer to IRS Tax Form 8863 and Publication 970 when filling out your form.

Other Recommendations:

Tuition and Fee Deduction is another means to get a deduction as an adjustment to income on your 1040 or 1040A form.  The amount to be deductible based on income levels may be as much as $4,000 based on income levels. If your modified adjusted income level is less than $80,000 for single and $160,000 for married joint, then you would be eligible to take the deduction. You may not take the deduction if you are filing married separate or if another person can claim an exemption for you as a dependent on his or her tax return.

Please verify the numbers on Tax Form 1098-T with your personal records. If there's a discrepancy, please contact the College's Tax Credit Line, 410-386-8496, for information. If you have a question(s) relating to your 1098-T, leave a message and a phone number, and we will respond. 

Questions relating to your individual tax return cannot be addressed by the college and should be discussed with your tax advisor.

Revised 1/18/08-IRS Guidelines