The Taxpayer Relief Act of 1997 passed a number of reforms to the current tax code. Importantly, this act created additional opportunities for a postsecondary education by making two new tax credits available for students, taxpayers, and families. The Hope Scholarship Credit and Lifetime Learning Credit are tax credits that may be claimed for out-of-pocket tuition and fee expense paid for a postsecondary education.
In order to determine eligibility for these new tax credits, postsecondary institutions are required to send student data to the Internal Revenue Service (IRS). Additionally, institutions must provide students with a copy of this data by sending a 1098-T form to all students involved in the IRS reporting process.
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