Education Tax Incentives
Please keep in mind ECSI cannot offer tax advice, please consult your tax professional.
Important Information
1. How can I get my login information if I do not know it?
Click here to "LOG IN." Then click on "Need Help Logging in?" (This is option is in blue just above the Log in button.) Enter all the information requested. Your login credentials will appear after you click submit. **Please note that the zip code entered must match the one on file that the school sent ECSI.**
2. What if my SSN is incorrect on the form?
The only reason ECSI needs a correct SSN on the tax form is to report the correct information to the IRS. If you are not going to claim the credit, then it is not necessary to correct the SSN. However, if you are going to claim the credit, you must fill out form W9S. This can be found on the ECSI website (www.ecsi.net/1098t .) After completing it, mail the form to 181 Montour Run Road, Coraopolis, PA 15108 or you can fax it to 1-866-291-5384. Please be sure to include your email address on the form. By providing your email address, ECSI will be able to notify you via email that your new form is available. You will also receive a new login for your website account.
3. What do I need to know if I feel the amounts on my 1098T form are wrong?
First, check to see if there is a form from the previous tax year, look on that form, if Box 7 was checked on the previous year’s form, then the tuition for the current tax year is on that form and is not included on the current tax year’s form.
Second, check the current tax year form, if Box 7 is checked then it is including amounts for the academic period starting Jan - March of the next tax year.
Third, this form is for qualified tuition and related expenses only, room and board will NOT be included.
Fourth, if your scholarships are not reflected, check to see if box 2 and 7 are checked. Some schools will bill for the next tax year in fall of the current tax year but will not add scholarships to the student account until the next tax year. Therefore, those scholarships will be on next year's form.
Fifth, have there been any changes to your class schedule. If box 2 and box 7 are checked for spring of the current tax year, and a class is added after the bill was sent, that change will be reflected on next year's tax form.
Click Here For More Frequently Asked Questions...
Where to Find Your Pin Number
You will need your School code, account number and PIN in order to login. These are printed on the bottom of your 1098-T form. Here is a sample 1098-T form with the area containing your login information highlighted in orange.
Click Here to Enlarge
Back to Top Overview of Taxpayer Relief Act of 1997
The Taxpayer Relief Act of 1997 (TRA97) introduced several tax incentives on qualifying student loans. The Hope and Lifetime Learning credits provide the ability to take a tax credit for qualifying educational expense. TRA also provides a deduction for the interest paid on qualifying student loans. The Student Loan Interest Deduction is reported on an IRS Form 1098-E (PDF). The Hope, Lifetime Learning, and American Opportunity Credits are reported on an IRS Form 1098-T (PDF). This document deals with both the 1098-E Student Loan Interest Deduction and the 1098-T Education Tax Credit.
Back to Top 1098-T
American Opportunity Credit
Under the American Recovery and Reinvestment Act (ARRA), more parents and students qualify for a tax credit, the American opportunity credit, to pay for college expenses.
The American opportunity credit originally modified the existing Hope credit for tax years 2009 and 2010, and was later extended for an additional two years – 2011 and 2012, making the benefit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. It also adds required course materials to the list of qualifying expenses and allows the credit to be claimed for four post-secondary education years instead of two. Many of those eligible qualify for the maximum annual credit of $2,500 per student.
The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and lifetime learning credits.
Special rules applied to students attending college in a Midwestern disaster area for tax-year 2009, only, when taxpayers could choose to claim either a special expanded Hope credit of up to $3,600 for the student or the regular American opportunity credit.
If you have questions about the American opportunity credit, these questions and answers might help. For more information, see American opportunity credit.
Hope Credit (1098-T)
The Hope credit generally applies to 2008 and earlier tax years. It helps parents and students pay for post-secondary education. The Hope credit is a nonrefundable credit. This means that it can reduce your tax to zero, but if the credit is more than your tax the excess will not be refunded to you. The Hope credit you are allowed may be limited by the amount of your income and the amount of your tax. The Hope credit is for the payment of the first two years of tuition and related expenses for an eligible student for whom the taxpayer claims an exemption on the tax return. Normally, you can claim tuition and required enrollment fees paid for your own, as well as your dependents' college education. The Hope credit targets the first two years of post-secondary education, and an eligible student must be enrolled at least half time. Generally, you can claim the Lifetime credit if all three of the following requirements are met:
You cannot take both an education credit and a deduction for tuition and fees (see Deductions, below) for the same student in the same year. In some cases, you may do better by claiming the tuition and fees deduction instead of the Hope credit.
Lifetime Learning Credit (1098-T)
The lifetime learning credit helps parents and students pay for post-secondary education. For the tax year, you may be able to claim a lifetime learning credit of up to $2,000 ($4,000 for students in Midwestern disaster areas) for qualified education expenses paid for all students enrolled in eligible educational institutions. There is no limit on the number of years the lifetime learning credit can be claimed for each student. However, a taxpayer cannot claim both the Hope or American opportunity credit and lifetime learning credits for the same student in one year. Thus, the lifetime learning credit may be particularly helpful to graduate students, students who are only taking one course and those who are not pursuing a degree. Generally, you can claim the Lifetime credit if all three of the following requirements are met:
If you're eligible to claim the lifetime learning credit and are also eligible to claim the Hope or American opportunity credit for the same student in the same year, you can choose to claim either credit, but not both. If you pay qualified education expenses for more than one student in the same year, you can choose to take credits on a per-student, per-year basis. This means that, for example, you can claim the Hope or American opportunity credit for one student and the lifetime learning credit for another student in the same year.
Tuition and Fees Deduction (1098-T)
You may be able to deduct qualified education expenses paid during the year for yourself, your spouse or your dependent. You cannot claim this deduction if your filing status is married filing separately or if another person can claim an exemption for you as a dependent on his or her tax return. The qualified expenses must be for higher education. The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000. This deduction, reported on Form 8917, Tuition and Fees Deduction, is taken as an adjustment to income. This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040). This deduction may be beneficial to you if, for example, you cannot take the lifetime learning credit because your income is too high. You may be able to take one of the education credits for your education expenses instead of a tuition and fees deduction. You can choose the one that will give you the lower tax. Generally, you can claim the tuition and fees deduction if all three of the following requirements are met:
You cannot claim the tuition and fees deduction if any of the following apply:
Student-activity fees and expenses for course-related books, supplies and equipment are included in qualified education expenses only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance.
Qualified Education Expenses (1098-T)
For purposes of the student loan interest deduction, these expenses are the total costs of attending an eligible educational institution, including graduate school. They include amounts paid for the following items:
Back to Top 1098-E
Student Loan Interest Deduction (1098-E)
Generally, personal interest you pay, other than certain mortgage interest, is not deductible on your tax return. However, if your modified adjusted gross income (MAGI) is less than $70,000 ($145,000 if filing a joint return), there is a special deduction allowed for paying interest on a student loan (also known as an education loan) used for higher education. Student loan interest is interest you paid during the year on a qualified student loan. It includes both required and voluntary interest payments. For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return before subtracting any deduction for student loan interest. This deduction can reduce the amount of your income subject to tax by up to $2,500 in 2008. The student loan interest deduction is taken as an adjustment to income. This means you can claim this deduction even if you do not itemize deductions on Form 1040's Schedule A.
Qualified Student Loan (1098-E)
This is a loan you took out solely to pay qualified education expenses (defined later) that were:
Loans from the following sources are not qualified student loans:
Back to Top Tax Advice
ECSI can provide replacement forms or information on the method used to compute eligible interest payments, but we cannot provide tax advice. If you have any questions about if or how much interest you can deduct, you should consult with a qualified tax professional or contact the IRS Taxpayer Assistance line at 1-800-829-1040. The IRS web site has many documents concerning TRA-97, including some self-help topics for tax filers. See the list of links below for a more comprehensive list.
Back to Top Additional Resources
Below are several resources that provide additional information concerning the student loan interest deduction, and the Taxpayer Relief Act of 1997. These documents or sites are not maintained by ECSI and we cannot be responsible for their content.
Back to Top
1. How can I get my login information if I do not know it?
Click here to "LOG IN." Then click on "Need Help Logging in?" (This is option is in blue just above the Log in button.) Enter all the information requested. Your login credentials will appear after you click submit. **Please note that the zip code entered must match the one on file that the school sent ECSI.**
2. What if my SSN is incorrect on the form?
The only reason ECSI needs a correct SSN on the tax form is to report the correct information to the IRS. If you are not going to claim the credit, then it is not necessary to correct the SSN. However, if you are going to claim the credit, you must fill out form W9S. This can be found on the ECSI website (www.ecsi.net/1098t .) After completing it, mail the form to 181 Montour Run Road, Coraopolis, PA 15108 or you can fax it to 1-866-291-5384. Please be sure to include your email address on the form. By providing your email address, ECSI will be able to notify you via email that your new form is available. You will also receive a new login for your website account.
3. What do I need to know if I feel the amounts on my 1098T form are wrong?
First, check to see if there is a form from the previous tax year, look on that form, if Box 7 was checked on the previous year’s form, then the tuition for the current tax year is on that form and is not included on the current tax year’s form.
Second, check the current tax year form, if Box 7 is checked then it is including amounts for the academic period starting Jan - March of the next tax year.
Third, this form is for qualified tuition and related expenses only, room and board will NOT be included.
Fourth, if your scholarships are not reflected, check to see if box 2 and 7 are checked. Some schools will bill for the next tax year in fall of the current tax year but will not add scholarships to the student account until the next tax year. Therefore, those scholarships will be on next year's form.
Fifth, have there been any changes to your class schedule. If box 2 and box 7 are checked for spring of the current tax year, and a class is added after the bill was sent, that change will be reflected on next year's tax form.
Click Here For More Frequently Asked Questions...
Where to Find Your Pin Number
You will need your School code, account number and PIN in order to login. These are printed on the bottom of your 1098-T form. Here is a sample 1098-T form with the area containing your login information highlighted in orange.
Click Here to Enlarge
Back to Top Overview of Taxpayer Relief Act of 1997
The Taxpayer Relief Act of 1997 (TRA97) introduced several tax incentives on qualifying student loans. The Hope and Lifetime Learning credits provide the ability to take a tax credit for qualifying educational expense. TRA also provides a deduction for the interest paid on qualifying student loans. The Student Loan Interest Deduction is reported on an IRS Form 1098-E (PDF). The Hope, Lifetime Learning, and American Opportunity Credits are reported on an IRS Form 1098-T (PDF). This document deals with both the 1098-E Student Loan Interest Deduction and the 1098-T Education Tax Credit.
Back to Top 1098-T
American Opportunity Credit
Under the American Recovery and Reinvestment Act (ARRA), more parents and students qualify for a tax credit, the American opportunity credit, to pay for college expenses.
The American opportunity credit originally modified the existing Hope credit for tax years 2009 and 2010, and was later extended for an additional two years – 2011 and 2012, making the benefit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. It also adds required course materials to the list of qualifying expenses and allows the credit to be claimed for four post-secondary education years instead of two. Many of those eligible qualify for the maximum annual credit of $2,500 per student.
The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and lifetime learning credits.
Special rules applied to students attending college in a Midwestern disaster area for tax-year 2009, only, when taxpayers could choose to claim either a special expanded Hope credit of up to $3,600 for the student or the regular American opportunity credit.
If you have questions about the American opportunity credit, these questions and answers might help. For more information, see American opportunity credit.
Hope Credit (1098-T)
The Hope credit generally applies to 2008 and earlier tax years. It helps parents and students pay for post-secondary education. The Hope credit is a nonrefundable credit. This means that it can reduce your tax to zero, but if the credit is more than your tax the excess will not be refunded to you. The Hope credit you are allowed may be limited by the amount of your income and the amount of your tax. The Hope credit is for the payment of the first two years of tuition and related expenses for an eligible student for whom the taxpayer claims an exemption on the tax return. Normally, you can claim tuition and required enrollment fees paid for your own, as well as your dependents' college education. The Hope credit targets the first two years of post-secondary education, and an eligible student must be enrolled at least half time. Generally, you can claim the Lifetime credit if all three of the following requirements are met:
- You pay qualified education expenses of higher education.
- You pay the education expenses for an eligible student.
- The eligible student is either yourself, your spouse or a dependent for whom you claim an exemption on your tax return
You cannot take both an education credit and a deduction for tuition and fees (see Deductions, below) for the same student in the same year. In some cases, you may do better by claiming the tuition and fees deduction instead of the Hope credit.
Lifetime Learning Credit (1098-T)
The lifetime learning credit helps parents and students pay for post-secondary education. For the tax year, you may be able to claim a lifetime learning credit of up to $2,000 ($4,000 for students in Midwestern disaster areas) for qualified education expenses paid for all students enrolled in eligible educational institutions. There is no limit on the number of years the lifetime learning credit can be claimed for each student. However, a taxpayer cannot claim both the Hope or American opportunity credit and lifetime learning credits for the same student in one year. Thus, the lifetime learning credit may be particularly helpful to graduate students, students who are only taking one course and those who are not pursuing a degree. Generally, you can claim the Lifetime credit if all three of the following requirements are met:
- You pay qualified education expenses of higher education.
- You pay the education expenses for an eligible student.
- The eligible student is either yourself, your spouse or a dependent for whom you claim an exemption on your tax return
If you're eligible to claim the lifetime learning credit and are also eligible to claim the Hope or American opportunity credit for the same student in the same year, you can choose to claim either credit, but not both. If you pay qualified education expenses for more than one student in the same year, you can choose to take credits on a per-student, per-year basis. This means that, for example, you can claim the Hope or American opportunity credit for one student and the lifetime learning credit for another student in the same year.
Tuition and Fees Deduction (1098-T)
You may be able to deduct qualified education expenses paid during the year for yourself, your spouse or your dependent. You cannot claim this deduction if your filing status is married filing separately or if another person can claim an exemption for you as a dependent on his or her tax return. The qualified expenses must be for higher education. The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000. This deduction, reported on Form 8917, Tuition and Fees Deduction, is taken as an adjustment to income. This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040). This deduction may be beneficial to you if, for example, you cannot take the lifetime learning credit because your income is too high. You may be able to take one of the education credits for your education expenses instead of a tuition and fees deduction. You can choose the one that will give you the lower tax. Generally, you can claim the tuition and fees deduction if all three of the following requirements are met:
- You pay qualified education expenses of higher education.
- You pay the education expenses for an eligible student.
- The eligible student is yourself, your spouse, or your dependent for whom you claim an exemption on your tax return.
You cannot claim the tuition and fees deduction if any of the following apply:
- Your filing status is married filing separately.
- Another person can claim an exemption for you as a dependent on his or her tax return. You cannot take the deduction even if the other person does not actually claim that exemption.
- Your modified adjusted gross income (MAGI) is more than $80,000 ($160,000 if filing a joint return).
- You were a nonresident alien for any part of the year and did not elect to be treated as a resident alien for tax purposes. More information on nonresident aliens can be found in Publication 519, U.S. Tax Guide for Aliens.
- You or anyone else claims an education credit for expenses of the student for whom the qualified education expenses were paid.
Student-activity fees and expenses for course-related books, supplies and equipment are included in qualified education expenses only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance.
Qualified Education Expenses (1098-T)
For purposes of the student loan interest deduction, these expenses are the total costs of attending an eligible educational institution, including graduate school. They include amounts paid for the following items:
- Tuition and Fees.
- Books, supplies and equipment.
- Other necessary expenses (such as transportation).
Back to Top 1098-E
Student Loan Interest Deduction (1098-E)
Generally, personal interest you pay, other than certain mortgage interest, is not deductible on your tax return. However, if your modified adjusted gross income (MAGI) is less than $70,000 ($145,000 if filing a joint return), there is a special deduction allowed for paying interest on a student loan (also known as an education loan) used for higher education. Student loan interest is interest you paid during the year on a qualified student loan. It includes both required and voluntary interest payments. For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return before subtracting any deduction for student loan interest. This deduction can reduce the amount of your income subject to tax by up to $2,500 in 2008. The student loan interest deduction is taken as an adjustment to income. This means you can claim this deduction even if you do not itemize deductions on Form 1040's Schedule A.
Qualified Student Loan (1098-E)
This is a loan you took out solely to pay qualified education expenses (defined later) that were:
- For you, your spouse, or a person who was your dependent when you took out the loan.
- Paid or incurred within a reasonable period of time before or after you took out the loan.
- For education provided during an academic period for an eligible student.
Loans from the following sources are not qualified student loans:
- A related person.
- A qualified employer plan.
Back to Top Tax Advice
ECSI can provide replacement forms or information on the method used to compute eligible interest payments, but we cannot provide tax advice. If you have any questions about if or how much interest you can deduct, you should consult with a qualified tax professional or contact the IRS Taxpayer Assistance line at 1-800-829-1040. The IRS web site has many documents concerning TRA-97, including some self-help topics for tax filers. See the list of links below for a more comprehensive list.
Back to Top Additional Resources
Below are several resources that provide additional information concerning the student loan interest deduction, and the Taxpayer Relief Act of 1997. These documents or sites are not maintained by ECSI and we cannot be responsible for their content.
- Internal Revenue Service (IRS) Website
- Tax Information for Students
- Tax Incentives for Higher Education
- IRS Tax Trails on Student Interest will walk you through a series of questions to see if you're qualified to take the deduction.
- IRS Publication 970 (PDF): Tax Benefits for Higher Education.
- Instructions for IRS Forms 1098-E and 1098-T (PDF)
- IRS Form 8863 -- Education Credits with instructions (PDF)
- IRS Form W-9S --Request for Student's or Borrower's Social Security Number (PDF)
- Taxpayer Relief Act of 1997 (full-text)
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