Tax Information

Daytona State College contracts with Tab Service Company to provide 1098-T tax forms to students. 1098-T forms will be sent via email or postal service by February 1^st of each year. In addition to the 1098-T form, a supplemental financial statement will be available online, which will include additional information that may be useful in determining eligibility for the various educational tax credits. Students may log on to TSC 1098-T Web Services to view and/or download their 1098-T form if needed. The 1098-T is an information only statement and may be used by the taxpayer to complete IRS Form 8863, which is the actual form used to claim an education tax credit. Please note that if your total financial aid (excluding direct student loans) for the calendar year exceeds your total tuition and fees for the calendar year you will NOT receive a Form 1098-T from Daytona State College.

The American Opportunity Tax Credit provides for a tax credit of up to $2,500 for each eligible student’s qualified educational expenses paid in a given tax year. To qualify for this credit, eligible students must have:

1. Been enrolled in one of the first four years of post-secondary education at an eligible school
2. Paid qualified expenses as a student enrolled at an eligible educational institution
3. Been enrolled in a program that leads to a degree, certificate, or other recognized educational credential, and
4. Taken at least one-half of the normal full time course load (equal to 6 credits at Daytona State) for at least one academic period during the tax year
5.  

An eligible student may be the taxpayer, a spouse, or a dependent who the taxpayer claimed as an exemption. An individual cannot claim the credit if their filing status is married filing separately or if he/she is claimed as a dependent on another person’s tax return (such as a parent’s return).

The amount a taxpayer may claim in a given tax year is generally equal to 100 percent of the first $2,000 of the taxpayer’s out-of-pocket expenses plus 25 percent of the next $2,000 of the taxpayer’s out-of-pocket expenses for each eligible student. Thus, the maximum credit a taxpayer may claim for a taxable year is $2,500 multiplied by the number of students in the family who meet the eligibility requirements. The maximum credit amount is phased out at certain income levels depending on the taxpayer’s filing status.  Up to 40% of the American Opportunity Tax Credit is refundable.  This means that even if you owe no taxes, you may still qualify to have a portion of the American Opportunity Tax Credit refunded.

Qualified tuition and related expenses include tuition and fees required for enrollment or attendance at an eligible educational institution that were paid during the calendar year for an academic period that begins within the same year or within the first 3 months of the following year. Expenses that do NOT qualify include:

1. Amounts paid for any course or other education involving sports, games, or hobbies (unless the course or other education is part of the student’s degree program)
2. Equipment, insurance, medical expenses, room and board, transportation, and other personal, living or family expenses
3.  

Furthermore, qualified tuition and related expenses must be reduced by the amount of scholarships, grants and other tax-free tuition benefits.

For additional information on educational credits, review IRS Publication 970 – Tax Credits for Higher Education.

The Lifetime Learning Credit is offered to encourage people to improve or acquire new job skills. This credit applies to tuition and fees for all years a student is enrolled in undergraduate, graduate, and continued courses. There is no requirement to be enrolled in a program leading to a degree or certificate and there is no requirement to be enrolled in a specified number of credits. The amount that may be claimed as a credit is generally equal to 20 percent of the taxpayer’s first $10,000 of out-of-pocket qualified tuition and related expenses for all the students in the family. The maximum credit allowed is $2,000 per return. The maximum credit amount is phased out at certain income levels depending on the taxpayer’s filing status. Taxpayers can not use both the American Opportunity Tax Credit and Lifetime Learning Credits for the same student in a single year.  The Lifelong Learning Credit is nonrefundable.

Qualified tuition and related expenses include tuition and fees required for enrollment or attendance at an eligible educational institution that were paid during the calendar year for an academic period that begins within the same year or within the first 3 months of the following year. Expenses that do NOT qualify include:

1. Amounts paid for any course or other education involving sports, games, or hobbies (unless the course or other education is part of the student’s degree program)
2. Books, equipment, insurance, medical expenses, room and board, transportation, and other personal, living or family expenses

Furthermore, qualified tuition and related expenses must be reduced by the amount of scholarships, grants and other tax-free tuition benefits.

For additional information on educational credits, review IRS Publication 970 – Tax Credits for Higher Education.

In compliance with IRS regulations, amounts paid to non-U.S. citizen students as scholarships or grants and compensation for personal services may be subject to income tax withholding. Amounts paid for personal services must be reported via a W-2 form. Amounts paid as scholarships that are subject to withholding are reported via a 1042-S form. 1042-S forms will be mailed by March 15th and W-2 forms will be mailed by January 31st of each year.

Whether a scholarship or grant from U.S. sources is subject to withholding depends on the nature of the payments and whether the recipient is a candidate for a degree. A qualified scholarship is NOT subject to tax. A qualified scholarship is a scholarship that is used for:

1. Tuition and fees required for enrollment or attendance at an educational institution and
2. Fees, books, supplies, and equipment required for courses of instruction at the educational institution

The payment of a qualified scholarship to a nonresident alien is not reportable and is not subject to withholding.

The portion of a scholarship paid to a nonresident alien which does not constitute a qualified scholarship is reportable on Form 1042-S and is subject to withholding. The withholding rate is 14% for nonresident aliens temporarily present in the United States in “F”, “J”, “M”, or “Q” nonimmigrant status. The withholding rate for nonresident alien individuals in any other immigration status is 30%.

All non-US citizens must complete an IRS Withholding Certification of Foreign Status form. This form will assist us in determining if an individual will be treated as a resident alien or nonresident alien for tax purposes. Students who satisfy the IRS Physical Presence Test will not be subject to withholding. Click here to print the IRS Withholding Certification of Foreign Status form.

For more information, please see IRS Publication 515 and IRS Publication 519.