Regarding
Tax Breaks
There are some education tax breaks that don’t require
preplanning. Some are tax credits, which reduce the actual tax
you owe.
Hope Scholarship
credit
You can
claim a Hope Scholarship credit of up to $1,500 for each dependent
enrolled in the first two years of post-secondary education.
To qualify for the credit in 2002, your modified adjusted
gross income must be under $50,000 if you are a single filer
and under $100,000 if you are married and filing jointly.
And you must have paid at least as much as the credit you
claim.
Lifetime
Learning credit
You can
claim a Lifetime Learning credit of up to $1,000 per year
for postsecondary education for an unlimited number of years,
provided you pay at least that much in expenses. In 2003,
that amount increases to $2,000. The income caps that apply
are the same as for the Hope Scholarship credit.
You can’t
claim both the Hope Scholarship credit and the Lifetime Learning
credit for the same student in the same year. But you can
claim for yourself if you’re enrolled in a qualifying
educational program.
Loan
interest
If you have a student loan, you may be able to deduct the
loan interest on your tax return, reducing taxable income.
But there are income caps. You can’t be earning more
than $65,000 if you’re a single filer, or more than $130,000
if you’re married and filing a joint return.
Note,
though, that these are student loans. Students of all ages
qualify for the deduction, including parents who are also
students. But it doesn’t apply to loans that parents
take to pay their children’s education expenses.
You
may be able to deduct interest on a home equity loan you take
to pay education expenses, however. You’ll want to review
your eligibility with your tax adviser
*Note
The information presented here is solely intended to be an
educational resource and is not intended to provide specific
investing, tax, business, or legal advice to any individual
or entity.
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