New tax credit options now available for students

By BETH LUCAS
Collegian Staff Writer

To reap the benefits of two new tax credits aimed at promoting higher education, college students will have to complete an additional tax form this year.

This is the first year the Hope Scholarship and Lifetime Learning credits will be applied to qualified students' federal tax forms.

The Hope Scholarship credits students who were freshmen and sophomores in 1998 up to $1,500. Students who paid tuition for courses on or after Jan. 1, 1998, will receive a tax credit for 100 percent of the first $1,000 of tuition and 50 percent of the second $1,000.

"This money is not a refund but would be credited toward any amount owed the federal government," said Tom Kirsch, owner of H&R Block, 2081 S. Atherton St.

The Lifetime Learning Credit grants up to $1,000, or 20 percent of the first $5,000 paid for tuition, to any full- or part-time student taking credit or noncredit courses who have paid on or after July 1, 1998.

Students who qualify for the tax credits and owe a greater total amount will still owe the difference, said Marian Goodnack, educational director for Jackson Hewitt Tax Service, 1786 N. Atherton St. Students who qualify for a tax credit larger than what they owe will not get a refund, Goodnack said.

Students can qualify for only one of the two credits and qualifying students must fill out an 8863 form. It may not be available in all locations with tax forms yet. Parents of students who are considered dependents must fill out the form.

In addition to the credits, there also is a new deduction line for students paying off college loans with interest.

The new deduction line is added to the 1040 forms and is for students and graduates who are paying off loans with interest only, Goodnack added.

Up to $1,000 of qualifying interest on qualifying loans, such as the Unsubsidized Pennsylvania Higher Education Assistance Agency loan, would be deducted from the amount of taxes owed. Only students who are within the first five years of paying the loan qualify.

• Services help students with tax-filing problems