The 2006 Form 1098-T will be mailed on or before 31 January 2008. Please allow 2-4 weeks for delivery. Below are some answers to frequently asked questions.

References:
	U.S. Internal Revenue Service Web site: IRS Forms on the Web Hope Scholarship Credit Lifetime Learning Credit Educational Tax Credit FAQs Dept. of Education Information: The HOPE Scholarship and Lifetime Learning Credits
Note:	Students should rely on receipts from their institution (UMUC) for class payments.

	How do I know if I am eligible for the Hope Scholarship tax credit?
	You are eligible only if you are a first- or second-year college/university student who attends school on at least a half-time basis. In other words, to be eligible, you must not have earned more than 60 credits from all schools you have attended. In addition, the Hope Credit cannot be claimed for more than TWO tax years.
	How do I know if I am eligible for the Lifetime Learning tax credit?
	Anyone taking undergraduate, graduate-level, professional, or other instruction intended to acquire or improve job skills is eligible for the Lifetime Learning credit. There is no age limit or credit hour limit. Qualified tuition and fees paid after January 1 are eligible for the credit in their appropriate tax year.
	What exactly are “qualified tuition and fees”?
	Qualified tuition and fees are those expenses a student is required to pay in order to be enrolled at or attend an eligible institution (all divisions of UMUC and virtually all accredited public, non-profit, postsecondary institutions). Amounts paid for such things as sports, games, or hobbies or fees associated with room and board, student activities, books, equipment or transportation are not “qualified tuition and fees”.
	I took classes with UMUC Asia during 2006, but I did not receive form 1098-T. Why not?
	If your classes were paid for using 100% military tuition assistance (TA), then you probably had no "out of pocket" expenses. Form 1098-T was only provided to citizens of the United States who paid for their qualified tuition and fees by check, money order, credit card, or student loan. If you did not pay for any tuition and fees "out of pocket", then you are not eligible for the Hope Scholarship or the Lifetime Learning Credit.
	Can I use both the Hope and the Lifetime Learning tax credits at the same time?
	No, an individual cannot use both credits during the same tax year. You can claim either a Hope credit or a Lifetime Learning credit. However, if the taxpayer is the parent of two college students and/or is also taking classes himself or herself, the Hope Scholarship may be claimed for one student and the Lifetime Learning credit for the other. In this example, the parent may also claim one of the credits. As noted, both credits cannot be claimed for the same student or individual in the same tax year.
	What tax form should I use to file for the Hope or Lifetime Learning Credit?
	You can claim the Hope or Lifetime Learning on an IRS Form 1040 or 1040A. If you are filing a 1040EZ you cannot claim the Hope/Lifetime credits. You must also file the supplementary IRS Form 8863 with your return.
	For what tax year may I claim the Hope Credit or the Lifetime Learning Credit?
	The Hope Credit or the Lifetime Learning Credit may be claimed for all tax years since their inception in June 1998. They may be claimed when respective year taxes are filed.
	Example: UMUC Asia students may claim credit for any qualified tuition and fees paid between 1 January - 31 December of any qualifying year. This one-year period includes Terms 3, 4, and 5 of the UMUC Asia Academic Year and Terms 1 and 2 of the following Academic Year.
	How do I calculate the amount of credit I am eligible for?
	There are several methods of calculating this amount. Please read through the following explanation completely in order to accurately determine the correct amount of your credit. The form 1098-T reflects the amount that you paid out of pocket during the 2006 calendar year for qualified tuition and fees. However, if you withdrew from one or more classes, and received a refund, or if there were any changes made to a third-party payment, causing you to pay more money after registration, these reduced or additional out-of-pocket expenditures will not be reflected on form 1098-T. The 1098-T represents the amount of qualified tuition and fees paid out of pocket only at the time of registration. Obtain an IRS Form 8863 from your local library or from the IRS. This form is designed to help you calculate the total amount of credit for which you are eligible. IRS Form 8863 is available for download in Adobe PDF format from www.irs.gov. Multiply the number of credits for which you enrolled by the tuition rate per credit. TIP!  UMUC Asia tuition was $163.00 per credit during 2005/06 academic year and $172.00 per credit during 2006/07 academic year. Thus, the tuition for a three-credit course during Terms 3 through 5 of 2005/06 was $489.00, and tuition for a three-credit course during Terms 1 and 2 of 2006/07 academic year was $516.00. Subtract any tuition money paid for you by another party or for which you were reimbursed by another party (military tuition assistance, scholarship funds, Pell/SEOG grants, or other forms of tuition assistance). Hope Scholarship Credit can be taken in full for the first $1100 paid out of pocket, and 50% (meaning up to $550) can be taken for the second $1100 paid out of pocket. These amounts may be periodically indexed for inflation. Credit for Lifetime Learning is limited to 20% of the first $10,000 paid out of pocket. Hence, the maximum Lifetime Learning credit that may be claimed in 2006 is $2000.
	Once I have determined that I am eligible for either tax credit and have calculated the amounts, where do I put this information on the Form 1040 or 1040A?
	On the back side of either form in the tax credit section. However, in order to claim this or any educational credit, you must first complete the Form 8863. This form requires your name, social security number, the amount of tuition paid, and a few calculations on your part. This form must be attached to the Form 1040 or 1040A when you file your tax return.
	What do I do with the Form 1098-T that I received in the mail?
	Keep it with your tax information for 2006. Do not send it to the IRS with your Form 1040/1040A. The IRS has been furnished the appropriate information regarding your attendance at UMUC Asia or another eligible college or university.
	Filing taxes for 2006 has been really confusing. How can I better prepare myself for filing taxes for 2007?
	Keep track of the tuition that you have paid. As you continue attending UMUC Asia, keep the pink copy of your Enrollment Form (UMC-126 in the lower left-hand corner). When you file your tax return in the spring of 2008 for the 2007 tax year, you can refer to your copies of the Enrollment Form for the amount of tuition that you paid.
	I did not retain copies of my Enrollment receipts (UMC-126) from UMUC Asia. Will UMUC Asia provide replacement copies upon request?
	Unfortunately, No. UMUC Asia cannot provide replacement copies of enrollment receipts. If you are unsure of which classes you registered for during a specific tax year, we can provide the class number and the credits that you enrolled in. Using our tuition chart, you can then calculate the total tuition charges for that tax year. UMUC Asia cannot provide an itemized listing of how you paid for each class. For this reason, we encourage you to keep all enrollment receipts.
	If I need to call UMUC Asia to get information about the number of credits in which I have enrolled, what is the best time to call?
	E-mail inquiries are preferred over phone calls. Please write to hope@asia.umuc.edu. If you prefer to call, we are open between the hours of 8 a.m. and 5 p.m. (Tokyo time) Monday through Friday. Please call DSN 225-3680. (If you are calling via DSN from the USA; please call the DSN operator in your area and ask for DSN 225-3680 at Yokota Air Base, Tokyo, Japan. If you do not call the DSN operator first, you will likely reach a government office in the Washington, D.C. area. If you are calling from a civilian phone; please dial 81-3117-55-3680.)

    In accordance with the requirements of the Taxpayer Relief Act of 1997, we have sent copies of form 1098-T and explanatory notes to students who enrolled and paid "out of pocket" tuition and fees in calendar year 2006. The information listed below is intended to help you calculate your payments of qualified tuition and related expenses for possible Hope Scholarship and Lifetime Learning Credits.

This information is not intended as tax advice; you should consult the following information, along with your tax advisor, to determine if you qualify for these credits or to answer any other questions.

More information on the U.S. Internal Revenue Service Web site:

• Hope Scholarship Credit
• Lifetime Learning Credit
• Educational Tax Credit FAQs

Dept. of Education Information

• Education Tax Incentives
• The HOPE Scholarship and Lifetime Learning Credits

2006 Charges That Qualify
Tuition (per credit)	Academic Year 05/06 (January-July)				Academic Year 06/07(August-December)
	Term 3	Term 4	Term 5		Term 1	Term 2
Undergraduate	$163.00	163.00	163.00		172.00	172.00
Graduate	$295.00	295.00	295.00		305.00	305.00
Fees
Undergraduate Application Fee		$30.00
Graduate Application Fee		$40.00

 
Several tax benefits are available to help families meet the cost of post-secondary education. These tax benefits are intended to help students and their parents as well as all working Americans to fulfill a variety of educational objectives.

Taxpayers can claim one or, in some cases, two tax credits for expenses they pay for postsecondary education for themselves and their dependent children. These tax credits can directly reduce the amount of federal income tax for returns filed for 2006. The Hope Scholarship Credit is available on a per-student basis for the first two years of postsecondary education, while the Lifetime Learning Credit applies on a tax-return basis and covers a broader time frame and range of educational courses. Education expenses paid for with tuition assistance, tax-free grants, scholarships, and employer-education assistance are not eligible for either tax credit. Education expenses paid with loans are eligible for these tax credits. Please see IRS Publication 970 for further restrictions.

To assist you in determining your eligibility for the credits, the total you paid out of pocket in 2006 for tuition and fees is included on the enclosed form 1098-T. However, if you withdrew from one or more classes and received a refund, those amounts will not be included in this calculation. Changes made to any third-party payment for your education expenses will likewise not be reflected on the 1098-T. The amount on this form reflects actual out-of-pocket payments made only at the time of registration. Any changes made after registration will need to be calculated by you and reflected on your own IRS form 8863.

A tax credit equal to all of the first $1,100 of qualified tuition and fees (less scholarships, grants, and tax-free tuition benefits) and half of the next $1,100 of qualified tuition and fees is available to parents of dependent students or to students who are not claimed as dependents on their parents’ return. The maximum credit is $1,650. The Hope credit can be claimed only for two tax years per student and applies only to the first two years of postsecondary education. Students must be enrolled at least half time during at least one academic period that begins during a tax year and cannot have had a drug felony conviction in a year that the credit applies. Education expenses paid on or after January 1, 2006, are eligible for the Hope credit for tax year 2006.

This credit applies to tuition and fees for undergraduate, graduate, and continuing-education course work. In 2006 a taxpayer may claim a credit equal to 20 percent of $10,000 of qualified educational expenses with a maximum credit of $2,000. Eligible education expenses are offset by scholarships, grants, and other tax-free tuition benefits. Education expenses paid on or after Jan. 1, 2006, are eligible for the 2006 Lifetime Learning credit.

The full value of both education tax credits is available to married taxpayers filing jointly with a modified adjusted gross income (MAGI) of $90,000 or less and to single taxpayers with an MAGI of $45,000 or less. The tax credits phase out gradually. Once married taxpayers’ MAGI exceeds $110,000 or single taxpayers’ MAGI exceeds $55,000, they are no longer eligible for these credits. The IRS periodically adjusts these income limits for inflation. Also, taxpayers cannot use both credits for the same student in a single year. Individuals should save their tuition and financial aid records for tax purposes.

Tax Provision	Tuition & Fees	Books	Room & Board	Purchase Equipment
Hope Scholarship & Lifetime Learning credits	yes	no	no	no
Education & Roth IRAs	yes	yes	yes	yes
Penalty-free IRA withdrawals	yes	yes	yes	yes
Deductible student loan interest	yes	yes	yes	yes
Employer education assistance	yes	yes	no	yes

 

Tax Credit	Eligible Courses of Study
Hope Scholarship	First two years (60 credits) of undergraduate (status as of January 1st)
Lifetime Learning	Undergraduate, graduate, and individual courses

 
In the fall of 2006, Tom’s wife, Jessica, returns to school when their son Mike starts at a community college. Their daughter Amy completes her second year in the spring of 2006 and returns to her private college for her junior year. When Tom and Jessica file their tax return for 2006, they can claim a $1,300 Hope credit for Mike based on his $1,500 tuition, a $1,650 Hope credit for Amy based on her second semester sophomore year tuition of $6,000, and a $200 Lifetime Learning credit based on the $1,000 tuition for Jessica’s part-time graduate courses. The family’s total education tax credits equal $3,150.

Tom & Jessica’s Tax Credits in 2006
Mike	$1,100 + (50% of $400)	=	$1,300
Amy	$1,100 + (50% of $1,100)	=	1,650
Jessica	20% of $1,000	=	200
Total Credit		=	$3,150

 
College graduates or their families can deduct interest paid on student loans. The tax deduction is available even if the taxpayer does not itemize other deductions. The loan does not have to be federally guaranteed or subsidized to be eligible for the deduction, but it must be used to pay education expenses such as tuition, fees, and room and board and meet all other requirements. The maximum deduction is $2,500 in 2006. Income limits do apply. The deduction is phased out for joint filers with an MAGI less than $135,000 ($65,000 if filing single).

You can claim the Hope Scholarhship OR Lifetime Learning Credit on IRS form 1040 or 1040A. You must also file the supplement, IRS form 8863.

Only charges that you paid yourself are allowed in calculating your qualified expenses. Therefore, you must deduct from your total tuition charge any payments made on your behalf by outside (third) parties. Examples of these third-party payments include, but are not limited to:

Pell Grant
SEOG Grant
University Grant
Educational Assistance Grant
UMUC President’s Grant

UMUC Scholarships
UMUC Alumni Association Scholarships
President’s Scholarship

Senatorial Scholarships
House of Delegates Scholarships

Military Tuition Assistance (TA)
Army Emergency Relief (AER)
DD Form 1556 (DAC)
Private Scholarships
Tuition Remission
Tuition Waivers
Employer Reimbursements
VA Benefits (including Vocational Rehab)

Since this list is not intended to be all-inclusive, it is recommended that you contact a tax advisor when determining the amount of your tuition and related expenses that qualify.