TAX CREDITS & DEDUCTIONS

Contacting a personal tax advisor for more information is recommended since some limitations do apply. The following only apply to tuition and fees not covered by other scholarships or grants. However, taxpayers with more than one dependent enrolled in an eligible institution may utilize a tax credit for each student.

The HOPE Tax Credit
A HOPE tax credit of up to $1,500 for qualified tuition and related expenses is available to eligible students during the first two years of post-secondary education.

Lifetime Learning Tax Credit
A Life Learning Credit of up to $2,000 is intended to help subsidize post-secondary studies after the first two years. Since it is available to both graduate and undergraduate students, it is also intended to help workers return to school to upgrade their skills or retrain for a new career. The credit only applies to qualified tuition and related expenses paid for all students enrolled in eligible educational institutions. This credit is available for all years of post-secondary education.
However, the claim may not be made if their modified adjusted gross income is $53,000 or more if single ($107,000 or more if filing a joint return). No credit is available to married individuals filing separate returns.
Students and their parents may claim the HOPE or Lifetime Learning Credit in the same year they make a tax-free withdrawal from a Coverdell Education Savings Account (ESA), provided that the distribution from the ESA is not used for the same expenses for which a credit is claimed.

STUDENT LOAN DEDUCTIONS

Interest on Student Loans will generally be deductible, even for taxpayers that don't itemize their deductions.
* No more than $2,500 is deductible.

* The deduction begins to phase out for taxpayers with
adjusted gross income above $50,000
($100,000 or above for joint returns).

PENALTY-FREE IRA WITHDRAWALS

If used for higher education expenses, contact your financial advisor for more information.