Higher Education Tax Benefits
There are two tax credits available to help you offset the costs of higher education by reducing the amount of your income tax. They are the American Opportunity Credit and the Lifetime Learning Credit.
For each student, you can elect for any year only one of the credits. For example, if you elect to take the American Opportunity Credit for a child on your tax return, you cannot, for that same child, also claim the Lifetime Learning Credit for. If you pay qualified education expenses for more than one student in the same year, you can choose to take the credits on a per-student, per-year basis. For example, you can claim the American Opportunity Credit for one student and the Lifetime Learning Credit for another student in the same year.
You are eligible to claim these credits if 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
American Opportunity Credit
You may be able to claim an American Opportunity Credit of up to $2,500 for qualified education expenses paid for each eligible student. Your allowable credit may be limited by the amount of your income. Also, the nonrefundable part of the credit may be limited by the amount of your tax.
Lifetime Learning Credit
You may also be able to claim a Lifetime Learning Credit of up to $2,000 for qualified education expenses paid for all eligible students. There is no limit on the number of years this credit can be claimed for each student. Your allowable credit may be limited by the amount of your income and the amount of your tax.
Tuition and Fees Deduction
You may be able to deduct qualified tuition and related expenses paid during the year for yourself, your spouse or a dependent. You cannot claim this deduction if your filing status is married filing separately or if another person is entitled to claim an exemption for you as a dependent on his or her tax return. The tuition and expenses must be for higher education. This deduction can reduce the amount of your taxable income by up to $4,000. This deduction is taken as an adjustment to income even if you do not itemize deductions.
Student Loan Interest Deduction
Generally, student loan interest is interest you paid during the year on a loan (such as a Federal Direct Student Loan or Direct PLUS Loan) you borrowed to pay qualified higher education expenses.
Form 1098-T Information
IRS Reporting & Compliance
Form 1098-T is an informational only tax document that is issued to students for the purpose of determining eligibility for education tax credits. The information on the form is also filed with the Internal Revenue Service (IRS). The university provides the form to each student who is a U.S. citizen or permanent resident with payments of qualified tuition plus related expenses received during the calendar year. The form is delivered through traditional mail unless one of the following exceptions applies:
- Student consented for electronic delivery before January 1 (view more about the paperless option below),
- Student is a non-resident alien, unless specifically requested, or
- Student was enrolled in non-credit courses or pre-college programs.
1098-T Paperless Option
Enrolling in the paperless option will give students access to the current year Form 1098-T weeks earlier than traditional mailing and students will have online access to all prior year forms on SIO.
To enroll in the paperless option, log into SIO, select 'IRS Tuition Statement (1098-T)' under the 'Finances' tab, and then click the 'Edit' button on the right side of the page. Finish by agreeing to the disclosures. Please note the following:
- The current form will be available online approximately January 15.
- Students will be notified by email as soon as the form is available.
- The paperless option reduces the cost and impact of paper forms.
Social Security Number & Individual Tax Payer Identification Number
For the student's protection, only the last four digits of the Social Security Number (SSN) or Individual Tax Payer Identification Number (ITIN) will be displayed on the form, but the full number is reported to the IRS. Reporting to the IRS depends primarily on the student's SSN or ITIN; therefore, it is very important that we have the student's correct number on file. If we do not have the student's number on file, we are required by law to request it in writing. We will never ask students to supply SSNs or ETINs by email. Instructions are as follows:
- If a student received notification from us to submit an SSN or ITIN, the student should log into SIO and select ‘Enter your SSN’ under the ‘My Info’ tab. Once there, enter the SSN or ITIN and click ‘Submit’.
- If a former student no longer has access to SIO, the student will need to complete IRS Form W-9S (pdf).
- For information about the form and instructions, visit IRS W-9S instructions.
- The student should complete Part I of the form should be completed and then the form may be faxed to 412-268-6651 or mailed to: Carnegie Mellon University, Student Accounts Office, Warner Hall A19, 5000 Forbes Avenue, Pittsburgh, PA 15213-3890
- The information provided in the form will not be used for any purpose other than to provide the student and the IRS with correct tax filing information.
Important: Failure to provide an SSN/ITIN may result in a fine by the IRS in accordance with Internal Revenue Code Section 6723.