Tax and Money Tip of the Week
Education Tax Deductions, Part II
November 23, 2011 | No. 69
With the current weak economic conditions, many people are considering additional education to refresh skills or acquire new ones. This week we have more to discuss on tax breaks that may be available to you if you are going back to school or sending a child off to college.
Here is a brief overview of two deductions and how they can be a real benefit to help ease the burden of higher education costs.
Student Loan Interest Deduction – This deduction could allow for up to $2,500 reduction in taxable income if the following apply.
- Loan must have been taken out solely to pay for qualified education expenses
- The student must be you, your spouse, or your dependent at the time that the loan was taken out
- Enrolled at least half-time in a degree program
- Deduction is limited on couples with modified adjusted gross income (MAGI) of $150,000 if married filing jointly and $75,000 if single, head of household or qualifying widow(er)
One great benefit of this deduction is that you can deduct interest paid during the remaining period of your student loan.
Tuition and Fees Deduction – This is a deduction for education tuition and fees, those that are required for enrollment or attendance at an eligible postsecondary educational institution. Personal living or family expenses, such as room and board do not qualify. You can reduce your income subject to tax by up to $4,000. This deduction can be claimed even if you do not itemize and may be beneficial to you if you do not qualify for the American opportunity or lifetime learning credits, subject to income limits of $160,000 if married filing jointly and $80,000 if single, head of household or qualifying widow(er).
Call us if we can help you determine if you qualify.
Questions or Comments?
Mark Vitek, CPA/PFS, CFP®
…until next week.