IRA withdrawals for education-Tax penalty-free distributions can be made from IRAs if used to pay for qualified higher-education expenses for a taxpayer, his or her spouse, or any child or grandchild of either. (Withdrawals are subject to regular income tax. Tax penalty-free education distributions cannot be made from qualified plans.)
The Hope Scholarship Credit-This provides 100% credit for the first $1,200 of expense toward the first and second year of eligible post-secondary education of eligible students and a 50% credit for the second $1,200, for a maximum total of $1,800. The amounts are subject to phase-out for higher-income taxpayers. The credit amount and income limits are also indexed for inflation. The amounts provided are for 2008. The Hope Scholarship Credit is generally replaced by the American Opportunity Tax Credit though 2017.
American Opportunity Tax Credit (AOC)-This is a modification of the Hope Credit. The maximum amount of the AOC is $2,500 per student. The credit is phased out if the modified gross income (MAGI) is between $80,000 and $90,000 for single people ($160,000 and $180,000 if a joint return is filed). The credit can be claimed for the first four years of post-secondary education. Generally, 40% of the AOC is now a refundable credit for most taxpayers. This credit is currently available only though 2017.
The Lifetime Learning Credit-This allows a credit of 20% of qualified tuition and related expenses up to a maximum credit of $2,000. The amounts are subject to phase-out for higher-income taxpayers. Unlike the Hope Scholarship Credit, the Lifetime Learning Credit is not indexed for inflation.
Deduction for student loan interest-A deduction is allowed for interest paid on qualified education loans subject to income limits. The maximum interest that may be deducted is $2,500 per year.
Neither The Prudential Insurance Company of America, Pruco Securities, LLC, nor its Planners render legal, accounting or tax advice. Please consult with your attorney, accountant, and/or tax professional for advice concerning your particular situation.
The Hope Scholarship Credit-This provides 100% credit for the first $1,200 of expense toward the first and second year of eligible post-secondary education of eligible students and a 50% credit for the second $1,200, for a maximum total of $1,800. The amounts are subject to phase-out for higher-income taxpayers. The credit amount and income limits are also indexed for inflation. The amounts provided are for 2008. The Hope Scholarship Credit is generally replaced by the American Opportunity Tax Credit though 2017.
American Opportunity Tax Credit (AOC)-This is a modification of the Hope Credit. The maximum amount of the AOC is $2,500 per student. The credit is phased out if the modified gross income (MAGI) is between $80,000 and $90,000 for single people ($160,000 and $180,000 if a joint return is filed). The credit can be claimed for the first four years of post-secondary education. Generally, 40% of the AOC is now a refundable credit for most taxpayers. This credit is currently available only though 2017.
The Lifetime Learning Credit-This allows a credit of 20% of qualified tuition and related expenses up to a maximum credit of $2,000. The amounts are subject to phase-out for higher-income taxpayers. Unlike the Hope Scholarship Credit, the Lifetime Learning Credit is not indexed for inflation.
Deduction for student loan interest-A deduction is allowed for interest paid on qualified education loans subject to income limits. The maximum interest that may be deducted is $2,500 per year.
Neither The Prudential Insurance Company of America, Pruco Securities, LLC, nor its Planners render legal, accounting or tax advice. Please consult with your attorney, accountant, and/or tax professional for advice concerning your particular situation.