2 new tax credits availableNov. 19, 1997
By Stephanie Kugle
Reporter for The Baylor Lariat
Students looking for ways to ease the financial burden of college may be interested in utilizing a tax credit for upcoming semesters.
The Taxpayer Relief Act of 1997 provides two new credits for education expenses. A tax credit (as opposed to a tax deduction) is a dollar-for-dollar reduction in a tax bill.
Beginning Jan. 1, 1998, the Hope Scholarship Credit will allow taxpayers to reduce their taxes by as much as $1,500 in one year. This credit covers college tuition and academic fees. For freshman and sophomore students, the credit is 100 percent of the first $1,000 in tuition and fees and 50 percent of fees of the second $1,000.
There is a phase-out, or gradual decrease over time, of credit, depending on an individual's adjusted gross income. The phase -out begins at $40,000 for individuals, with credit being eliminated if the adjusted gross income is more than $50,000.
Juniors, seniors and graduate students are ineligible to receive the Hope Scholarship Credit, but may qualify for the Lifetime Learning Credit.
With a Lifetime Learning Credit, individual taxpayers can elect a 20 percent tax credit of the first $5,000 of tuition per year. The credit takes effect on July 1, 1998 and has the same phase-out as the Hope credit.
The Hope credit is available per student, while the Lifetime Learning credit is based on total tuition paid.
Baylor students are grateful that the government is making efforts to ease the financial hardship they face when paying tuition.
'In getting people to go to college it gives them more incentive because they have to pay so much,' said Danielle Conley, a Panama City Beach, Fla., freshman. 'A college education is expensive. A lot of people feel an education is unattainable because they can't afford it.'
Sheryl Lewis, a Houston sophomore, echoed Conley's thoughts.
'It's ridiculous that college costs so much where you have to get not one loan but two or three,' Lewis said. '(By allotting tax credits) they would be promoting higher education.'
Lewis believes that juniors and seniors deserve to get a larger tax credit than freshmen and sophomores because upperclassman are less likely to drop out of school.
'They have the right idea, they just have it backwards,' she said. '(A larger credit for upperclassmen) would be an incentive to stay in school.'
'There's an unfair inequity between the upperclassmen and freshmen and sophomores,' said Jeff Reddick, a The Woodlands senior. 'Just because I'm older doesn't mean I don't have as great of a need as a freshman or sophomore.'
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