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TAX CREDITS |
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The Taxpayer Relief Act of 1997 provides a number of tax benefits for students and their families paying for educational costs. These benefits include education tax credits, a new education IRA, withdrawals from traditional IRAs for education expenses and a deduction for student loan interest. The following information will help you determine which benefits apply to you and your family so that you can plan for your federal income tax return. |
| Check this site for the most recent IRS page of Education Tax Credits.
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Please check with a certified accountant or your tax professional for current updates. |
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HOPE Scholarship |
| During the first two years of post-secondary education, students
or parents can take a Hope Scholarship tax credit of up to $1,650
per student per year for tuition & related expenses. The tax
credit may be used only with enrollment to an institution that participates in the U.S. Department of
Education student aid programs. To qualify, the student must have
earned a high school diploma or equivalent degree, be enrolled at
least half-time for one academic period during the tax year, and
must not have been convicted of a federal or state drug felony.
The Scholarship is available to individuals with modified adjusted gross income (AGI) under $47,000 (phasing out between $47,000 & $57,000), or under $94,000 for joint filers (phasing out between $94,000 & $114,000). Eligible family members include the taxpayer, the taxpayer’s spouse and the taxpayer’s dependent(s). You cannot combine the Hope Scholarship Credit with the Lifetime Learning Credit or the Education IRA in the same year for the same child. |
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LIFETIME LEARNING CREDIT (LLC) |
| Taxpayers can receive a tax credit up to $2,000 per return for qualified tuition and expenses. Expenses
that qualify are tuition and fees for undergraduate, graduate or
professional degree courses for students enrolled at least half time
in a degree or certificate program. Tuition and fees for courses
at an eligible institution to acquire or improve job skills are also
eligible, even if the student is enrolled on a less than half-time
basis. Lifetime Learning Credit is available to individuals with modified adjusted gross income (AGI) up to $47,000 (phasing out between $47,000 and $57,000), or up to $94,000 for joint filers (phasing out between $94,000 and $1114,000). Eligible family members include the taxpayer, their spouse and the taxpayer’s dependent(s). Educational expenses are eligible for credit for an unlimited number of tax years. You cannot combine the Hope Scholarship Credit with the Lifetime Learning Credit or the Education IRA in the same year for the same child. |
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IRA Withdrawals |
| IRA withdrawals before age 59 1/2 are now allowed without early
withdrawal penalty, if, funds are to be used for education expenses
for academic periods beginning on or after |
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Education IRAs |
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Qualified taxpayers will be able to establish Education IRAs and
contribute up to $500 nondeductible per calendar year for each
designated beneficiary under age 18. The beneficiary need not be
your dependent child. The tax credit is available for individuals with modified AGI under $95,000 (phasing out between $95,000 & $110,000) and joint filers with modified AGI under $150,000 (phasing out between $150,000 & $160,000). You cannot combine the Hope Scholarship Credit with the Lifetime Learning Credit or the Education IRA in the same year for the same child. |
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STUDENT LOAN INTEREST DEDUCTIONS |
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The tax credit for 2007 is available for individuals with modified AGI under $55,000
(phasing out between $55,000 and $70,000) and joint filers with modified AGI under $110,000 (phasing out between $110,000 and $140,000). |
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~ Lyme Academy
College of Fine Arts ~ 84 Lyme Street Old Lyme, Connecticut 06371 - T: 860.434.5232 F: 860.434.8725 |
