Tax Benefits
Student Loan Interest Tax Deduction
The maximum deduction is $2,500. It is phased out for joint filers with adjusted gross income levels between $110,000 and $140,000, and single filers with adjusted gross income levels between $55,000 and $70,000. The deduction is available for all educational loans including federal loans made to students or parents, and loans from private lenders, made on or after January 1, 1998. For complete information you can download IRS Publication 970 Tax Benefits for Higher Education at the IRS website: www.irs.gov.
The Lifetime Learning Tax Credit
Note: Cannot be used in conjunction with higher education expense deduction.
To take advantage of this credit, the taxpayer, you or your parents (if they claim you as a dependent on their taxes) must have a tax obligation during the 2007 year. If you are not a tax dependent on anyone else’s taxes and earned too little to pay any federal taxes for 2007, (i.e. less than $8,200) you are ineligible for this benefit. The maximum benefit is $2,000 for 2007. Eligibility for this benefit phases out starting at $47,000 and is completely eliminated at $57,000 for single filers (for joint filers, the benefit begins to phase out at $94,000 and is completely phased out at $114,000). These limits are adjusted for inflation and for complete information you can download IRS Publication 970 Tax Benefits for Higher Education at the IRS website: www.irs.gov. (Form needed: IRS Form 8863)
Deduction for Higher Education Expenses
To take advantage of this tax deduction, the taxpayer, you, or your parents (if they claim you as a dependent on their taxes) must have a tax obligation during the 2007 year. Taxpayers cannot claim both this deduction and the Lifetime Learning Tax Credit. Qualified expenses include tuition and fees at an eligible institution paid between January 1 and December 31, 2008. The maximum credit is $4,000 per year for taxpayers with adjusted gross incomes of up to $80,000 per year or $160,000 for married taxpayers filing jointly. For more information, see the IRS publication 970.
Additional Tax Resources
In addition, there are a number of web sites that can provide helpful information if you're interested in learning more about tax credits and deductions for education expenses. These sites include:
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