GW has hired a private company to help it follow new federal tax laws that provide new tax deductions to college students and their families.
The new deductions include the Hope Scholarship credit and Lifetime Learning credit. Interest paid on any type of student loan up to $1,000 also now is deductible under provisions of the Taxpayer Relief Act of 1997.
“The Hope (Scholarship) Credit is a nonrefundable credit meaning if you don’t owe tax, you don’t get the money,” said Sam Serio, a spokesman for the Internal Revenue Service.
Serio said the Hope credit provides up to $1,500 in tax benefits for students’ first two years at an institution of higher learning.
He said the Lifetime Learning credit allows taxpayers to receive a 20 percent credit for the first $5,000 in tuition-related payments, meaning the maximum amount taxpayers could deduct is $1,000. The credits phase out at certain income levels, Serio said.
Director of Student Accounts Services Kathleen Haines said GW has hired CDSI, a company that handles higher education issues, to administer the 1098-T form. With this form, sent to the federal government and students, GW will compile basic student profile information this year, Serio said.
“In future years, the universities will be required to report additional information such as qualified expenses, qualified tuition and related expenses, tuition refunds and the name, address and taxpayer identification number of the person who claims the student as a dependent,” Serio said.
Serio said the IRS will not enforce the requirements for the next couple of years as long as universities “make a good faith effort” this year.
Haines said GW and other institutions are adjusting to the new laws.
“The burden on the schools has been incredible,” she said. “No one has used programs to provide (this type of) information.”
Haines said although the original deadline to mail Form 1098-T was Feb. 1, technological difficulties forced GW to send the information a few days late.
“We are in the process of downloading the information and sending it to CDSI,” she said. “The University is providing (CDSI) with the information from our files.”
When the forms do arrive at students’ homes, Haines said they will provide information beyond what the law requires. She said in addition to the basic profile information, tuition payers will receive a financial statement that will list charges, including tuition and fees, and payments of scholarships, loans and personal payments.
“We’re trying to be a little proactive in providing the basic information,” she said.
Haines said GW has not decided if it will continue its business relationship with CDSI in the future. But she said she has concerns with the number of phone calls GW would have to handle on its own if it did not retain such a firm.
CDSI provides a toll-free number (1-877-467-3821) to field questions about student accounts. The company also has a Web site where the same information will be listed, she said.
“While we can provide basic information, we are not a tax advising service,” she said.
