Tax Breaks for College and Higher Education
7 Tax Breaks for College and Higher Education; By: Schoolwork.org Editor
NOTE: We do not offer financial advice. This article is just a sampling of Tax Breaks that are available to both college students and parents. Be sure and meet with a Financial Aid Adviser at your college, as well as a CPA.
1. Coverdell Education Savings Account (used to be named the Education IRA) Limited to $2,000, then a $500 limit starting in 2011
2. American Opportunity Tax Credit (used to be named the Hope Scholarship Credit). Available amount: $1,800 per student.
3. Lifetime Learning Credit - Available amount $2,000 per student
4. Student Loan Interest Deduction - The taxpayer is able to deduct the interest that has been paid on 1st sixty student loan payments.
5. Qualified Tuition Programs (529 Plans) - allows a taxpayer to save up for OR pre-pay tuition costs for a beneficiary. It is very important to see what flexibility rights you have if the beneficiary student goes to college out-of-state or private colleges.
6. IRA Withdrawals - A ten (10) percent penalty withdrawal tax will NOT apply if the distribution of the funds are used to pay for college tuition AND school expenses as Transportation, Room and Board, college expenses and school supplies.
7. State Education Bond - programs run by respective states that offers tax free interest, as well as other benefits set by the respective state, when funds are used for college tuition AND school expenses as Transportation, Room and Board, college expenses and school supplies.
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